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By Chino S. Leyco, Reporter
BENCHMARK interest rates climbed on the heels of
the government’s announcement of the acceleration of inflation to
a 14-year high.
On Monday’s auction for short-term government
securities or IOUs, the yield for the 91-day Treasury bill (T-bill),
which banks use in pricing their loans, jumped to 5.699 percent from
the 3.673 percent the paper fetched during its last auction in
January 21.
Banks were willing to buy as much as P7.188
billion of the P3-billion worth of three-month papers on offer, but
the government decided to award only P2.238 billion.
The Bureau of the Treasury resumed offering the
91-day T-bill on Monday after deciding to cancel scheduled auctions
of the shorter-term IOUs in the second quarter of the year. The
government canceled the auctions after banks sought unreasonably
high rates before parting with their money.
National Treasurer Roberto Tan said the auction
committee decided a partial award after banks sought high yields,
which were no longer reflective of rates in the secondary market.
“[The bureau] has adjusted to the trend,
taking into consideration the recent announcement on inflation rate,
which was at the high side of the expectations,” Tan told
reporters after the auction.
He said the market has already factored in the
possible response of the Bangko Sentral ng Pilipinas (BSP) on the
11.4-percent inflation last month.
“I think there’s an expectation of an uptick
in policy rates because of this,” the official said, referring to
the BSP’s overnight borrowing and lending rate, which stand at
5.25 percent and 7.25 percent, respectively.
The auction committee also accepted banks’
bids for the 364-day T-bills, the yield for which rose from the
previous 6.703 percent. The government secured P3 billion in fresh
borrowings.
Metropolitan Bank and Trust Co. said players
stayed on the sidelines after the release of the June inflation
rate, which breached the higher end of the BSP’s forecast.
“Trading will be lethargic in the coming days
as players remain cautious given the view of rising interest rates
resulting from higher inflation rate,” Metrobank said.
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