T-bill rates down across the board

MANILA, Philippines - Treasury bill (T-bill) rates fell across the board during yesterday’s auction at the Bureau of the Treasury.

Yield for the benchmark 91-day T-bills fell 9.4 basis points to 2.205 percent from the 2.299 percent recorded during the previous auction last April 24.

It was also lower than the secondary market rate 2.665 percent recorded before the auction.

Likewise, the 182-day T-bills fetched lower yields, shedding 3.6 basis points to settle at 2.602 percent as against the 2.638 percent posted in the previous auction.

The average rate was also lower as compared to the secondary market rate of 2.9463 percent for the same securities.

Lastly, the longest-dated T-bills saw an average rate of 2.966 percent, 2.3 basis points lower than the previous rate of 2.989 percent.

It was, however, higher than the 2.8351 percent rate for the securities in the secondary market.

All tenors were oversubscribed, with total tenders reaching P34.51 billion as compared to the P15 billion offering.

“We are pleased with the results of the auction, first of all we have a very healthy subscription given again ample liquidity,” National Treasurer Rosalia De Leon told reporters after the auction.

The strong demand seen at the auction reflects the market’s preference for short-term securities, according to De Leon.

“It is expected because of the anticipation of the second rate hike of the next FOMC (Federal Open Market Committee) meeting and the good data indicators of the US – unemployment rate and fund payments rate,” she said.

“And then of course, the inflation remains steady at 3.4 percent so banks continue to hedge against possible increase to mitigate impact of losses in their books,” she added.

She also noted the recent shift of market demand from the Bangko Sentral ng Pilipinas’ term deposit facility to government securities.

According to De Leon, the drop in the rates was also within market expectations.

“Based on the consultations we had with the market and with what we were seeing earlier, I think that is already expected. It is just how much the rates would fall, how much basis points it will really fall,” she said.