T-bill rates decline on oversubscription

MANILA, Philippines — Yields of short-term government securities dropped across the board as investors swamped the Treasury bill auction yesterday.

The average rates for the 91-day, 182-day and 364-day T-bills stood at 1.078 percent, 1.348 percent and 1.563 percent, respectively, which were all below the figures from the previous auction.

The government yesterday sold a total of P17 billion T-bills as the Bureau of the Treasury (BTr) upsized the amount from an initial offer of P15 billion.

The auction was nearly four times oversubscribed, with total tenders reaching P59.064 billion, which the BTr attributed to the liquidity of the financial market.

National Treasurer Rosalia de Leon said investors went on to purchase short dated securities to take advantage of low rates brought about by manageable inflation figures. Likewise, she said T-bill rates would likely remain low as the market awaits the next rate-setting meeting of the Bangko Sentral’s Monetary Board.

“Full award across three tenors and double noncompetitive bids for 364 days. Liquidity remains strong and stable inflation pushed down rates,” De Leon said.

“For now, rates will stay low as markets anticipate the Monetary Board to hold rates,” she said.

Inflation in May steadied at 4.5 percent, and the average for the year now stands at 4.4 percent, still above the government’s target band of two to four percent.

The Monetary Board is scheduled to convene on Thursday to decide whether to maintain the key interest rate at a record low of two percent.

For June, the BTr looks to generate P215 billion from the domestic financial market, higher than the P170 billion in April and May and P160 billion in March.

Auctioned every Monday are P15 billion worth of short term debt papers divided into P5 billion each for tenors of 91 days, 182 days and 364 days.