T-bills fetch lower rates

MANILA, Philippines — Short-term government securities yesterday fetched lower rates across-the-board amid healthy liquidity in the financial system, prompting the Bureau of the Treasury (BTr) to upsize the awarded volume to investors.

During yesterday’s auction, Treasury bills (T-bills) maturing in 91 days fetched an average rate of 2.09 percent, 17.9 basis points lower than the previous week’s 2.269 percent.

The P5 billion offering was almost six times oversubscribed, with total tenders amounting to P29.334 billion. This prompted the auction committee to upsize the volume to P7 billion.

The BTr likewise increased the volume for 182-day securities from P5 billion to P7 billion, after the average interest rate declined by 18.1 basis points to 2.193 percent from 2.374 percent a week ago.

Healthy demand met the auction as total tenders reached P33.7 billion.

Lastly, the Treasury made a full award of P10 billion for the 364-day debt papers at an average rate of 2.653 percent, 10.8 basis points down from the previous auction’s level of 2.761 percent.

Total tenders amounted to P40.771 billion, more than four times larger than the P10 billion offering.

In a text message to reporters, National Treasurer Rosalia de Leon said the results of the auction reflect the market’s continued preference for government securities amid healthy liquidity in the financial system.  

“There was strong reception to the T-bills auction at much lower rates, reflecting the liquid tone of the market in the aftermath of supportive actions of the Bangko Sentral ng Pilipinas. Flight to safety continues,” she said.  

Given the strong appetite from investors, de Leon said the auction committee decided to open the tap facility for 364-day T-bills, for a total volume of P5 billion.

The BSP last month implemented an off-cycle 50-basis point interest rate cut to help cushion the impact of the coronavirus pandemic. This monetary action brought the total rate cuts to 125 basis points this year.

It also lowered the reserve requirement ratio by 200 basis points on March 30, releasing about P200 billion to boost liquidity and provide more funds for borrowers.