The Treasury on Monday sold only P10.46 billion worth of government debt papers out of the original offer of P20 billion, as investors demanded higher rates ahead of the possible US Federal Reserve rate hike before the end of the year.
Interest rate on 91-day or three-month debt facilities climbed 6.3 basis points to 1.836 percent from the previous rate of 1.773 percent. Tender for the three-month papers reached P10.255 billion, or slightly higher than the P8-billion offer.
The Treasury accepted only P4.24 billion worth of the 91-day re-issued Treasury bills of the original P8-billion offer.
“Amidst healthy NG cash position, limited demand and rising rates, the auction committee decided to partially award to provide market guidance,” the Treasury said in a statement after the auction.
“[This will also] allow a gradual adjustment in light of the possible Fed rate liftoff in December,” the Treasury said.
Interest rate on the 182-day or six-month debt instruments also went up by 3.7 basis points to 1.843 percent from 1.806 in the previous auction. Tenders for the six-month debt papers reached P8.32 billion, slightly higher than the P6-billion offer.
It also awarded P4.12 billion out of the original offer of P6 billion worth of 182-day papers.
Interest rate on the 12-month debt papers also increased by 7.4 basis points to 1.952 percent from 1.878 percent in the previous auction. It accepted only P2.1 billion of the 364-day treasury bills with an original offer of P6 billion.
The national government earlier reduced its borrowing requirement from the original target after it posted a fiscal surplus in the first half of 2015, as opposed to the programmed deficit for the six-month period.
Based on the inter-agency Development Budget Coordination Committee’s mid-year report on the 2015 national budget, the revised net financing program for 2015 was P296.8 billion, compared to the original P310.4 billion.
The borrowing mix was also revised from 86 percent domestic and 14 percent foreign loans to 75 percent domestic and 25 percent foreign.
The government intends to borrow P241.8 billion from the domestic market this year while the remaining P55 billion will come from foreign creditors.