T-bill rates barely move due to strong demand

Treasury bill rates moved sideways at Monday's auction, with demand for the short-term debt paper overwhelming the supply that was available for sale. The Treasury bureau sold P8.5 billion worth of 91-day, six-month and one-year debt instruments as planned. The 91-day T-bill rate, used by banks as a benchmark for their short-term lending rates, rose by 2.7 basis points (bps) to 3.914 percent from 3.887 percent at the Dec. 7 auction. The rate of the six-month paper inched up by 3.4 bps to 4.129 percent from 4.095 percent at the previous auction, while the one-year paper rate rose by 2 bps to 4.582 percent from 4.562 percent. "The bids were very meaningful. The volumes were very substantial," National Treasurer Roberto B. Tan told reporters after the auction. The short-term paper was oversubscribed, with bids for the 91-day and six-month securities reaching thrice the amount offered. Bids for the 91-day T-bill reached P6.65 billion against a P2-billion offer, while bids for the six-month paper hit P9.19 billion against a P3-billion offer. The one-year paper was likewise oversubscribed, but not as much as the shorter-term debt paper, with bids reaching P7.55 billion against a P3.5-billion offer. A bond trader said the rates had moved sideways due to the market's preference for T-bills over longer-term-securities. Another trader agreed, saying investors with excess funds had chosen to invest in short-term debt due to concerns over the budget deficit and rising inflation. "With deficit and inflation expected to rise, investors preferred the T-bills to be on the safe side," the trader said. — Louella D. Desiderio, BusinessWorld