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91-day T-bill rate up to 6.685% |
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By Des Ferriols
The Philippine Star 04/12/2005 Interest rates on the benchmark 91-day Treasury bills (T-bills) went up slightly yesterday, settling at 6.685 percent from 6.539 percent a week ago. At the same time, rates for the 182-day T-bills went up to 7.99 percent yesterday from 7.831 percent a week ago. Auction officials said the rates were more or less reflective of prevailing market yields following the increase in the policy rates of the Bangko Sentral ng Pilipinas (BSP) on Thursday last week. According to National Treasurer Omar Cruz, the government was largely upbeat over the on-going deliberations in Congress on the proposed adjustment of the value added tax (VAT). The passage of the VAT law would allow the government to collect more taxes and beef up its revenue base, reducing the need for the BTr to increase its borrowing from the domestic market. The optimism in the T-bill market was also reflected in the currency market with the peso appreciating to 54.30 to the dollar. The peso opened at 54.55 to the dollar and reached an intra-day low of 54.59 but the currency recovered later in the session to close at 54.30 to the dollar. Total trade was heavy and the Philippine Dealing System recorded total volume at $348.6 million with the bulk of trades occurring in the afternoon session, amounting to $210.5 million. Cruz said the auction committee decided to reject the bids for the 365-day T-bills because the rates were mostly throw-away bids and the government was not desperate for cash. "I don’t need cash," Cruz said. "We have the cash and we know the market is very liquid and so are we. We can afford to reject those throw-away bids." On the other hand, Cruz said the bids for the 91-day and 182-day treasury bills were reasonable and within the 25-basis point adjustment of BSP’s policy rates. "The only exception was the one-year T- bills so there was no point in entertaining those bids," he said. "Eventually, they’ll come crawling back to me." On the other hand, Cruz said there will be no change in the government’s foreign borrowing plan despite the plan of the National Power Corp to launch its own bonds. "The borrowing plan is the same–$4 billion for this year," he said, adding that the government would go to the market if and when "conditions are ideal." The Arroyo administration has already raised $1.5 billion early this year and it has acquired the authority for a euro-denominated bond offer for an undisclosed amount. Under its original borrowing plan, the government was to raise a total of $3 billion from commercial borrowing and $1 billion from official development assistance. Since it has already raised $1.5 billion from its global bond offer in January, it only has to raise $1.5 billion more for the remainder of the year. |
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