T-bill rates may rise ahead of Fed

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RATES OF Treasury bills (T-bill) on offer today are likely to move sideways with a slight upward bias as the market awaits the result of the Federal Open Market Committee’s (FOMC) meeting this week and the release of the government’s third quarter borrowing program.

The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bill) today, broken down into P4 billion in 91-day papers, P5 billion in 182-day debt, and P6 billion in the one-year securities.

A trader said T-bill yields may inch higher this week ahead of the US central bank’s policy meeting on June 18-19.

“T-bills yields for auction may move sideways slight upward bias from the previous auction. Market players wait for the FOMC meeting this week where statements of a possible monetary policy easing this year will be closely watched,” Robinsons Bank Corp. peso sovereign debt trader Kevin S. Palma said.

“The market’s also looking forward for the release of BTr’s third quarter borrowing program,” Mr. Palma added.


The Treasury borrowed P15 billion as planned at its T-bills auction last week, with bids from market participants surging to P53.6 billion, more than thrice the amount the government wanted to borrow.

Broken down, the government borrowed P4 billion as planned via the 92-day tenor as bids amounted to P7.8 billion. The average rate declined 43.7 basis points (bp) to 4.555% from the 4.992% logged in the previous auction.

The Treasury also made a full award of the 183-day T-bills as it accepted P5 billion as planned out of offers totalling P20.132 billion. The average yield dropped 47.7 bps to 4.923% from 5.4%.

For the 365-day T-bills, the government borrowed the programmed P6 billion out of the P25.655 billion tendered by banks. Its average yield also slid 42.9 bps to 5.069% from the 5.498% quoted in the previous offering.

Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 4.642%, 4.935% and 5.213%, respectively, on Friday.

On the other hand, National Treasurer Rosalia V. De Leon said last week that the third quarter borrowing program will be lower than the P315 billion planned during the April to June period amid slow government spending seen earlier this year.

Ms. De Leon said the government has more than enough cash to finance the “sustained” higher spending for the next quarter or so.

Meanwhile, an analyst said demand for the T-bills could rise ahead of more scheduled cuts to banks’ reserve requirement ratios (RRR).

The Bangko Sentral ng Pilipinas (BSP) slashed the RRR of lenders by a percentage point effective May 31 to 17% for universal and commercial banks, 7% for thrift banks, and 4% for rural and cooperative banks, unleashing billions of pesos into the financial system.

The reserve ratios of big banks and thrift lenders will be reduced further by 50 bps each on June 28 and July 26 to finally settle at 16% and 6%, respectively.

The government is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — RJNI