35-day T-bills fetch lower rates

MANILA, Philippines — Debt papers maturing in 35 days fetched lower rates yesterday on the back of the 50-basis point rate cut announced by the Bangko Sentral ng Pilipinas (BSP) last week, according to the Bureau of the Treasury (BTr).

During yesterday’s auction, the BTr’s auction committee fully awarded P15 billion worth of 35-day treasury bills at an average rate of 1.684 percent, 41.7 basis points down from the 2.101 percent recorded in the previous auction.

National Treasurer Rosalia de Leon said this was also the lowest average rate ever fetched by the 35-day securities.

It was likewise lower than the secondary market rate for comparable securities, which in this case are one-month debt notes, which settled at 1.989 percent.

The P15 billion offering was more than four times oversubscribed, with total tenders amounting to P62.541 billion.

According to de Leon, the decline in rates during yesterday’s auction continues to be a result of the 50-basis point interest rate cut implemented by the Bangko Sentral ng Pilipinas (BSP).

Last week, the Bangko Sentral ng Pilipinas (BSP) decided to cut the overnight reverse repurchase rate to a record low of 2.25 percent.The overnight deposit and lending rates were also reduced by 50 basis points to 1.75 percent and 2.75 percent, respectively.

BSP Governor Benjamin Diokno said the monetary measure aims to boost market confidence and further mitigate the downside risks to growth.

But despite the surge in demand, de Leon said the auction committee decided not to open the tap facility for 35-day T-bills.

“We do not upsize for 35-day (securities) because of very short tenor,” she said.

The government is planning to borrow P205 billion from the domestic market this July. This is higher than the BTr’s P170 billion domestic borrowing plan in June.