BTr fully awards T-bills amid rate uptick

De Leon said banks’ demand for higher yield may be attributed to expectations of sustained rise of interest rates both here and abroad. (PNA photo)

MANILA — Banks exhibitted refreshing bullishness as they submitted higher-than-offered bids for Treasury bills (T-bills), which the Bureau of the Treasury’s (BTr) auction committee awarded in full across-the-board Monday.

This, even as rates rose for all three tenors, which National Treasurer Rosalia De Leon said is as expected.

Average rate of the bellwether 91-day paper rose to 3.261 percent from 3.219 percent during the auction last July 23.

This tenor was offered for Php4 billion and tenders reached Php9.585 billion.

Rate of the 182-day T-bill averaged at 4.294 percent, higher than the 4.235 percent last week.

It was offered for Php5 billion but bids were more than twice at Php13.054 billion.

The 364-day bill’s average rate increased to 4.900 percent from 4.809 percent in the previous auction.

Banks submitted a total of Php13.177 billion, higher than the Php6 billion offering.

De Leon said banks’ demand for higher yield may be attributed to expectations of sustained rise of interest rates both here and abroad.

Earlier, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said the Monetary Board (MB) is considering another rate hike next month to address any secondary effect of the rising inflation rates. This is on top of the 50 basis points increase in the BSP’s key rates so far this year.

De Leon identified the 4.1 percent Q2 growth of the US economy, based on preliminary reports, as another contributor in the uptick of T-bill rates. This domestic expansion rate is the fastest since 2014.

This report reinforced expectations for sustained growth of the US economy and the increase in the Federal Reserve rates, she said.

The National Treasurer noted that while T-bill yields continue to rise its hike is now at five to 10 basis points unlike before when it was at around 30 basis points.

“So I think hopefully this is the start also of the plateauing of the (incremental increase) and so, of course, we have to wait for the outurn of inflation for July, ” she said.

The Philippine Statistics Authority (PSA) is scheduled to report the July 2018 inflation report on August 7.

In the first half this year, inflation averaged at 4.3 percent, higher than the two to four percent target of the government for this year until 2020.

Meanwhile, De Leon said Philippine Finance officials are still studying when to issue its planned Samurai bond as well as the pricing given recent developments and speculations that Bank of Japan (BoJ) will tweak its rates.

Philippine officials have submitted requirements for a possible issance of the yen-denominated Samurai bond, which De Leon earlier said can be issued as early as August this year.

De Leon said they are considering to issue three-, five-, seven- and 10-year paper but has dropped the possibility of a 20-year bond.

“But eventually we can still drop (the 20-year tenor). We are just looking at what would be the levels across these tenors,” she said, adding that volume would be around USD500 million to USD1 billion “depending on the pricing.”