T-bill yields drop as high liquidity persists

MANILA, Philippines — Short-term government securities yesterday fetched lower rates across-the-board amid strong liquidity in the market, the Bureau of the Treasury (BTr) said.

During yesterday’s auction, the 91-day Treasury bills (T-bills) fetched an average rate of 5.15 percent, 10.8 basis points lower than the 5.258 percent recorded during the previous auction.

The P4 billion offering was about 2.5 times oversubscribed, with total tenders reaching P10.562 billion.

Rates for the 182-day debt papers, meanwhile, averaged 5.59 percent, 11 basis points down from 5.7 percent last week.

Healthy demand met the P5 billion offering, with bids amounting to P11.418 billion.

Lastly, the average rate for the 364-day T-bills declined by 18.6 basis points to 5.683 percent from last week’s level of 5.869 percent.

Total tenders reached P25.896 billion, more than four times higher than the P6 billion offer volume.

 “We had very good results from today’s auction given that the subscription is more than two times the offer amount. And of course, we’ve seen the rates coming down by more than 10 basis points, and in the case of the one-year (T-bills), even short of 20 basis points than the previous auction and very much also than the existing secondary rates,” National Treasurer Rosalia de Leon said after the auction.

De Leon attributed the favorable results of the auction to the Bangko Sentral ng Pilipinas’ decision to cut the reserve requirement ratio (RRR) for banks, which injected additional liquidity into the financial system.

Earlier, the Monetary Board of the BSP decided to implement a reduction in the RRR for universal and commercial banks in three stages, starting with 100 basis points effective May 31, followed by 50 basis points on June 28, and another 50 basis points on July 26. This would bring the RRR level to 16 percent from the current 18 percent.

The central bank likewise cut the RRR for thrift and mid-sized banks to six percent from the current level of eight percent in three tranches similar to the schedule for universal and commercial banks.