050107: 91-day T-bill rises to 3-mo high of 3.044%

By Des Ferriols
The Philippine Star 05/01/2007

The rate on the 91-day Treasury bills (T-bills) rose to its highest in more than three months, averaging at 3.044 percent from 2.952 percent at the previous auction in April 16, tracking secondary market rates.

Debt yields went up in the secondary market last week after the National Government exceeded its P45.8-billion deficit ceiling in the first quarter by P6.2 billion.

Finance officials have said tax collections in the first three months of the year failed to keep pace with spending increases, casting doubt over the government’s ability to meet its P63- billion deficit goal for 2007.

The yield on the 182-day notes rose to 3.721 percent from 3.560 percent.

The Bureau of the Treasury (BTr) rejected all bids for the 364-day securities.

The rates on the one-year notes would have gone up to 4.502 percent from 3.820 percent when the government last sold the debt in February.

Total tenders reached P15.87 billion compared to the government’s offer of P5 billion. Officials awarded a total of P3 billion and accepted an additional P400 million in bids for the 91-day T-bills.

National Treasurer Omar Cruz told reporters that the market had already factored in the fiscal slippage in the first quarter and remained optimistic that the fiscal program would get back on track in the remaining quarters.

More significantly, however, he said the market was waiting for two major developments: the pricing of the central bank’s special deposit accounts (SDAs) and the conclusion of the May general elections.

"The Bangko Sentral ng Pilipinas (BSP) has to come out with the terms of its SDAs and the market is waiting for that," Cruz said.

Cruz said the market was also usually wary about the elections and wanted to hold off until after May 14. He added that this was the reason the auction committee decided to reschedule its auction for the following week instead.

Cruz said that despite the anticipation, however, the mopping up operations of the BSP is expected to have minimal impact on the government securities market.

To arrest the rapid increase in domestic liquidity, the BSP wants to attract government deposits away from banks by offering better interest rates and the Monetary Board also allowed the trust departments of banks to park their funds in the BSP’s SDAs.

Cruz said the moves should have only a minimal impact on the treasury bills market since government corporations have been buying less and less government securities since rates started to go down.

According to Cruz, the increasingly small size of government securities that were in the hands of government owned and controlled corporations (GOCCs) should therefore minimize the impact of the BSP’s mopping up operations.

 

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