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T-bill rates up, 91-day at 6.595% |
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The Manila Bulletin 04/05/2005
Treasury bill yields rose at the regular auction yesterday despite the National Treasury’s rejections of some bid as banks expect the central bank to soon raise interest rates in the face of a steady rise in domestic inflation. The National Treasury rejected some tenders for the benchmark 91-day paper and the 182-day bill, and rejected all bids for the 364-day bills due to high yields sought by banks. In last week’s auction, all tenders were rejected. The average yield on the 91-day paper rose to 6.595 percent from the previous 6.539 percent, despite some tenders being rejected. The average yield on the 182-day paper rose to 7.831 percentfrom the previous 7.59 percent. If not for the rejections of some bids, the yield on the six-month paper would have risen to 7.916 percent. National Treasurer Omar Cruz said the government accepted some bids for the three and six months maturity to align treasury bill yields with the prevailing rates in the local debt market, but had to reject all tenders for the one-year paper due to the overly high yields sought by banks. He said the treasury could tolerate a yield increase of 25 basis points but not the level sought by banks for the 364-day paper — an average of 8.869 percent which was sharply higher than the previous 8.147 percent. Tenders for the total R6 billion — R2 billion for each maturity — offered at yesterday’s auction reached R14.88 billion, with R9.75 billion of that for the 91-day bill. Cruz believes the domestic capital market is still awash with liquidity, but expectations of monetary tightening is driving up interest rates. "We must meet the market half way. We respect where the market is trading," he said. Cruz acknowledged that yields could go even higher if the inflation rate rose further in March and the central bank decides to raise rates at its meeting Thursday. The March inflation data is due Tuesday. Meantime, Cruz said there isn’t any immediate need for the government to go back to the international debt market even after the central bank’s Monetary Board approved last week its plan to issue eurodenominated bonds to finance the budget deficit this year. "There isn’t any need to go back to the market as early as possible," Cruz told reporters, noting that the government had in February raised $1.5 billion via a global bond issue. |
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