T-bill rates drop as auction more than 3X oversubscribed

MANILA, Philippines — Short-term government securities fetched lower rates across the board yesterday as investors continued to swarm the Bureau of the Treasury’s (BTr) auction facility amid ample liquidity in the financial market.

Rates for the benchmark 90-day Treasury bills (T-bills) averaged 3.003 percent during yesterday’s auction, 6.9 basis points lower than the 3.072 percent yield in the previous auction.

Healthy demand met the auction, with total tenders amounting to P21.596 billion or more than 3.5 times higher than the P6-billion offered volume for the tenor.

The average rate for 182-day debt papers likewise declined by 5.5 basis points to 3.365 percent from 3.42 percent last week.

Total tenders amounted to P21.06 billion, also about 3.5 times larger than the P6 billion volume for the offering.

Lastly, 364-day debt notes fetched an average rate of 3.787 percent, which is 4.9 basis points lower than the 3.836 percent recorded last week.

The P8-billion offering was also 3.5 times oversubscribed, with total tenders amounting to P28.21 billion.

In an interview, national deputy treasurer Erwin Sta. Ana said the drop in rates was expected given the ample liquidity in the domestic market.

“The rates were as expected, based on market feedback, so we had a quite good auction,” Sta. Ana told reporters.

“It’s obvious that liquidity is around,” he said.

Furthermore, the Treasury official said investors had also priced in the pronouncement of the Bangko Sentral ng Pilipinas (BSP) on a possible cut in interest rates in the second quarter of the year.

“(Rates are) possibly tracking also the US Treasuries which over the past week or past days have been declining,” he said.

Given the healthy demand for T-bills, the BTr has decided to open its over-the-counter facility to welcome more bids for the one-year securities from state corporations.

Asked how long interest rates would remain on its downward trajectory, Sta. Ana said “it’s difficult to say at this time, how long this would be sustained.”

“But of course, one major factor is the COVID-19 (coronavirus disease 2019), because it affects the global scene. It’s starting to spread based on news reports and that could actually have an impact on global growth. We will see how it develops and how it affects the greater economy as a whole,” the Treasury official said.

But despite the threat of COVID-19, Sta. Ana said the Treasury was not yet considering to delay its fund-raising activities in the offshore debt market. These include a possible US dollar-denominated global bond sale, a panda bond offering, and a samurai bond issuance.

“As we speak, we haven’t really been discussing about delaying our plans to tap offshore markets because of COVID-19,” he said.

“For example, the US dollar, it’s still being considered. We’re still doing some monitoring on that. But on the other markets, we have already stated it could probably be anytime within the first half of the year. That hasn’t changed as of now. For panda, samurai, it’s all in the table, possibly first half,” he added.