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 PRESSROOM / NEWS
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 | Republic of the Philippines
DEPARTMENT OF FINANCE
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
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May 17, 2010
T-BILL RATES: MAY 17, 2010
BTr
FPPO-JEP
The National Government only sold P5.34 billion worth of Treasury Bills in today’s auction, lower than the planned borrowing of P8.0 billion. This was to keep the yields from rising unreasonably as bids today were off-market, higher than the prevailing rates in the secondary market. Yields across all tenors inched-up a bit as market players sought premium for their money. Caution once more ruled market sentiment amidst inflation concerns and uncertainties over the direction of policy rates. It seemed that market players were protecting their current liquidity thus with the defensive bids today. But with the government indicating for weeks that it has comfortable cash position following the success of its recent off-shore floats, it has the option to make partial awards or to even reject bids it deems unacceptable just as what happened today. While the Auction Committee made a full award for the 182-day, it decided to limit the sale of both the 91-day and the one-year T-bills. This move by the government signaled its unwillingness to give in to the upward pressure in the borrowing costs particularly if bids were not aligned with the movement in the secondary market.
Although there was an increase across all tenors, yields barely moved up particularly the shorter-term securities. While the Auction Committee allowed the 182-day to increase, it awarded the debt as planned worth P3.0B at a rate of 4.113 percent or 3.6 basis points higher than the 4.077 percent this paper fetched last May 4 auction. Market players tendered a total of P6.43 billion, more than two times the offer size. On the other hand, the Auction Committee capped the increase of both the 91-day and the one-year debts to rates it deemed acceptable. The average rate of the 91-day T-bill rose to 3.856 percent, or 1.6 basis points up than the previous rate of 3.840 percent. The paper was oversubscribed with bids totaling to P4.45B against the P1.5B offer. Despite the strong demand, the Auction Committee had to make a partial award of P1.23B to keep the yield from rising to 3.883 percent had it decided to sell as planned. Similarly for the one-year debt which inched-up to 4.492 percent or 8.4 basis points higher from 4.408 percent previously, the Auction Committee had to settle for a partial award of P1.11B out of the planned P3.5B offering as the average rate would have risen by 18.1 basis points to 4.589 percent had it decided to make a full award. Total subscriptions reached P5.41B, a little over than the offer size.
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