Treasury bill yields rose across all tenors at Tuesday’s auction as investors demanded higher returns amid mounting inflation concerns and expectations that the Bangko Sentral ng Pilipinas (BSP) may have to tighten monetary policy further.
The increase came less than two weeks after the BSP raised its key overnight interest rates by 50 basis points to 5.5 percent on Oct. 22, reflecting growing pressure to contain accelerating prices.
The Bureau of the Treasury (BTr) received P84.02 billion in tenders against its P50-billion offering, indicating ample investor demand despite higher yield expectations. However, it awarded only P42.8 billion, rejecting some bids, particularly for one-year securities, where dealers sought yields as high as 6.95 percent.
The average rate on 91-day Treasury bills climbed to 6.438 percent from 6.264 percent at the previous auction. The 182-day rate increased to 6.646 percent from 6.430 percent, while the 364-day yield rose to 6.756 percent from 6.583 percent.
The across-the-board increases suggest investors are building in a higher inflation and interest-rate environment, while the BTr’s partial award indicates its reluctance to accommodate borrowing costs deemed excessive.
Meanwhile, the 35-day cash management bill (CMB) fetched an average yield of 5.607 percent, slightly higher than 5.589 percent previously. The BTr fully awarded the P10-billion offering after receiving P11.3 billion in bids.
The auction underscores the growing tension between the government’s financing requirements and investors’ demand for yields that compensate for inflation risks and the possibility of further monetary tightening.
