T-bill rates drop on oversubscription

MANILA, Philippines — Government securities fetched lower rates yesterday amid healthy market demand, reflecting the ample liquidity in the market as a result of the central bank’s move to cut the volume for its term deposit facility, the Bureau of the Treasury (BTr) said yesterday.

During yesterday’s auction, the 91-day Treasury bills (T-bill) fetched an average rate of 2.088 percent, 5.5 basis points lower than the 2.143 percent recorded in the previous auction.

The P6 billion issuance was almost five times oversubscribed, with total tenders amounting to P29.429 billion.

Rates for the 182-day securities also declined 2.8 basis points to 2.564 percent from 2.592 percent in the previous auction.

Total tenders for the P5 billion offering amounted to P11.035 billion.

Lastly, the 364-day T-bills fetched an average rate of 2.92 percent, 1.5 basis points lower than the 2.935 percent recorded in the previous auction.

The P4 billion offer was almost three times oversubscribed, with P11.79 billion in total tenders.

National Treasurer Rosalia de Leon said the result of the auction reflects the ample liquidity in the market due to the Bangko Sentral ng Pilipinas’ decision to reduce the offer volume for its 28-day term deposit facilities.

“We see the very liquid tone of the market, given that the BSP has reduced the 28-day (term deposit) facility offer from P140 billion to P110 billion. So that’s P30 billion released liquidity,” De Leon told reporters after the auction.

Furthermore, De Leon also attributed the drop in rates to the muted expectations for a rate hike in the US.

“We’ve seen that for all the three budget tenors, the rates have gone down, given that we have very soft data coming of the US. So expectations have been muted in terms of another rate hike in December,” she said.

The BSP reduced the volume of its 28-day term deposits to P110 billion from P140 billion starting Sept. 6. The size of seven-day term deposits was retained at P40 billion.

BSP Deputy Governor Diwa Guinigundo said the decision to reduce the offering for the 28-day term deposits was based on the recognition that the sustained economic growth would give rise to higher demand for credit.