T-bill rates down across the board

MANILA, Philippines — Short-term government securities yesterday fetched lower rates across-the-board, prompting the Bureau of the Treasury (BTr) to upsize the volume amid strong demand from investors.

During yesterday’s auction, the 91-day Treasury bills (T-bills) fetched an average interest rate of 2.479 percent, 13.8 percent lower than the 2.617 percent recorded last week.

The P5 billion offering was almost five times oversubscribed, with total tenders amounting to P24.748 billion. As a result, the auction committee decided to upsize the volume to P7 billion.

Similarly, the average rate for the 182-day debt papers declined by 20.6 basis points to 2.625 percent from last week’s 2.831 percent.

The auction committee decided to upsize the volume to P7 billion after total tenders reached P33.41 billion, almost seven times larger than the original offer size of P5 billion.

Rates for the 364-day securities settled at 2.945 percent, 10.9 basis points down from 3.054 percent last week.

Healthy demand also met the auction as total tenders amounted to P41.77 billion, prompting the auction committee to fully award the P10 billion offering.

“With its decision, the committee raised a total of P24 billion from its P20 billion initial offering,” the BTr said.

Sought for comment, National Treasurer Rosalia de Leon said government securities saw a decline in rates due primarily to the market’s low inflation expectation for April.

“Lower inflation expectation with low oil prices,” de Leon said when asked what factors pushed interest rates lower.

The Bangko Sentral ng Pilipinas (BSP)‘s Department of Economic Research earlier said that inflation may have settled between 1.9 and 2.7 percent in April.

The figure is slower than the 2.5 percent inflation rate recorded in March and the three percent posted in April last year.

Furthermore, de Leon said the rates are still influenced by the ample liquidity in the financial system as well as the BSP’s decision to further cut policy rates by 50 basis points last month.

“Government securities is the only game in town,” she said.