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June 22, 2024

Risk-averse investors happy with rising T-bill rates

Treasury bill (T-bill) rates favored by risk-averse investors all moved to higher grounds on Monday, including the 91-day tenor which rose 8.9 basis points to 0.899 percent.

According to the Bureau of Treasury, the increases were anticipated and a reflection of the sentiment among financial market participants for the US Fed shoe to drop and begin unwinding its monetary support program.

“No one wants holding a low-yield instrument when that happens,” Gil Beltran, chief economist at the Department of Finance said by phone.

He noted that T-bills no longer hold the distinction as lending benchmarks as the market has since moved closer to the higher-yielding instruments auctioned by the Bangko Sentral ng Pilipinas instead.

T-bills are basically for the risk-averse investing public such as conservative trust entities and high net worth individuals looking to preserve capital than generate high returns.

That T-bill rates are moving up is indicative of a market prepared to go elsewhere than loiter around government securities issues offering paltry rates, which was why Monday’s auction committee grabbed at the chance to sell all P5 billion worth of three-month T-bills

“The auction was more than twice oversubscribed with total bids reaching P35.9 billion,” the BTr said when it awarded all P15 billion worth of T-bills at Monday’s exercises.

The 182-day T-bills averaged 10.9 basis points to 1.157 percent from only 1.066 percent while the 364-day tenor rose 9.3 basis points to 1.568 percent from 1.475 percent.