T-bill rates fall at record pace

MANILA, Philippines — Treasury bills (T-bills) fetched lower rates across the board yesterday amid healthy market demand, driven by developments both in the domestic and international markets, the Bureau of the Treasury (BTr) said.

During yesterday’s auction, the average rate for the bellwether 92-day securities slid by 43.7 basis points to 4.555 percent from 4.992 percent last week.

Total tenders reached P7.8 billion, almost the P4 billion offer size.

Debt notes maturing in 183-days likewise saw its average yield easing by 47.7 basis points to reach 4.923 percent as compared to last week’s level of 5.4 percent.

The P5 billion offering was more than four times oversubscribed, with total tenders amounting to P20.132 billion.

The 365-day T-bill rate averaged 5.069 percent, 42.9 basis points down from 5.498 percent the previous auction.

Healthy demand characterized the auction as total bids reached P25.655 billion, more than four times larger than the P6 billion offer volume.

According to National Treasurer Rosalia De Leon, this is the first time the Treasury has seen rates declining as much as 40 basis points for all tenors.

The lower rates prompted the auction committee to fully award all P20 billion worth of debt papers to government securities eligible dealers.

She said the decline in the rates was “expected” given the developments both in the domestic and global landscape.

“On the onshore market, in spite of the pickup in terms of inflation to 3.2 percent, the BSP pronouncement is that we will still be on track in meeting the inflation target of about 2.9 percent for this year,” De Leon said.

“And of course, last May 30 was the first tranche of the cut in reserve requirements, so we see that there’s excellent participation in the auction. We see moving forward that would also be the trend,” she added.

De Leon said there are also expectations of interest rate cuts from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

“The expectation is also the rate cut, and I think as the BSP Governor has mentioned it remains to be on the table. Even in the US Fed, the market is projecting that there will be two rate cuts given the drag in growth (due to) trade tensions,” she said.

Inflation last May slightly accelerated to 3.2 percent from three percent in April, bringing the year-to-date average to 3.6 percent,  still within the government’s full year inflation target of two to four percent.