Market demands premium for one-year T-bills

BSP is closely monitoring events such as the drone attack on the oil refining facilities of Saudi Arabia and its impact on the policy discussions of the Monetary Board next week

Market demand showed clearly but the mixed results in Treasury bill (T-bill) yields prompted the Bureau of Treasury (BTr) to grant a partial award of bids.

National Treasurer Rosalia de Leon particularly noted the market wanted more from 364-day T-bills, the bid rates higher than the secondary market would pay for them even as the shorter-dated T-bill rates retreated.

“We saw that in terms of rates, they’re even lower than the current secondary, except for the one year. That’s why we also made a partial award. We don’t want (the one-year rate) to trend higher than the secondary (market),” De Leon told reporters.

Carlo Asuncion, chief economist at Union Bank, attributed the uptick on the one-year T-bill rate to market apprehension over the impact of the drone attack on the oil refining facilities of Saudi Arabia. Experts have said the attack translates to the erosion of global supply by more or less 5 percent.

Also, she said the upcoming policy rate adjustments at the Bangko Sentral ng Pilipinas (BSP) proved a positive influence on demand at the auction.

“Given the two tenors, (the 91- and 182-day), they are all going down following the pronouncements of (BSP) Governor Diokno that there is also room for the Monetary Board to cut the policy rates and even the (banks’) RRR,” De Leon said the deposit reserve requirement whose prospective easing will add still more liquidity to the financial system.

According to her, the BSP is closely monitoring events such as the drone attack on the oil refining facilities of Saudi Arabia and its impact on the policy discussions of the Monetary Board next week.

Rates for both the 91- and 182-day benchmarks stood 11.2 and 0.9 basis point higher to 3.037 percent and 3.420 percent, respectively, from only 3.149 percent and 3.429 percent on the same.

Separately, yield for the 364-day T-bill posted a 0.7 basis point increment to 3.666 percent versus only 3.659 percent at the last auction. In all, the BTr sold only P12.98 billion of its P15 billion offer after attracting P35.1 billion worth of tenders, an oversubscription by more than twice.