T-bill rates fall further as inflation eases

MANILA, Philippines — Treasury bills fetched lower rates across all tenors amid easing domestic inflation and expectations of further monetary policy easing in the country and abroad, the Bureau of the Treasury (BTr) said yesterday.

During yesterday’s auction, rates for the bellwether 91-day securities averaged 3.254 percent, 14.4 basis points lower than 3.398 percent the previous auction last Aug. 5.

Total tenders reached P10.76 billion, almost three times more than the P4 billion offering.

The average rate for 182-day debt papers likewise dropped by 20.6 basis points to 3.471 percent, as compared to 3.677 percent two weeks ago.

The P5 billion offering was almost three times oversubscribed, with total tenders amounting to P14.11 billion.

Lastly, 364-day T-bills secured an average rate of 3.636 percent, which is 26.2 basis points down from the previous auction’s level of 3.898 percent.

Healthy demand met the debt papers as total bids reached P20.885 billion, more than three times higher than the P6 billion offer size.

In an interview, Deputy Treasurer Erwin Sta. Ana said the results of the auction are in line with market expectations.

“It’s a good turn out, close to three times bid-to-cover (ratio), rates are much lower than the previous, in line with the initial feedback from our GSEDs (government securities eligible dealers),” Sta. Ana said.

The Treasury official said the decline in rates may be attributed to various factors in the local and international market, including easing domestic inflation, possible monetary easing on the part of the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, and the trade war between the US and China.

“There are several triggers--pronouncements from the BSP for more manageable inflation in the third and probably in the fourth quarter, as the (central bank) governor mentioned just recently; information about further cuts on the RR (reserve requirement) and even in the policy rate, not only here, but also discussions with the Fed; and then there’s the continuing trade dispute between US and China,” he said.

Sta. Ana said these factors may still point to further reduction in the interest rates of government securities.

Meanwhile, Sta. Ana said BTr is still open to the possibility of conducting pre-funding activities in the domestic market, depending on the disbursement performance of agencies in the second half of the year.