T-bill rates seen to decline further

Treasury bill (T-bill) rates are expected to further decline this week by at least 10 to 15 basis points, newly installed National Treasurer Sergio Edeza, said, as he claimed that current rates are still high.

"My fearless forecast? Rates will drop by about 10 to 15 percent basis points. I hope the market will not disappoint me," Edeza, who as the new head of the Bureau of Treasury, will preside at his first T-bill auction today.

"There is still room for further rate cuts since present rates are still considered high," Edeza said, adding there is a strong likelihood that the 91-day T-bills, the benchmark used for pricing bank loans, will drop to single-digit levels this year.

In last week‘s auction, government securities traders went for the bellwether 91-day T-bills which dropped by 25.6 basis to 10.607 percent from last week’s 10.863 percent; the 181-day T-bills dropped by 26.1 basis points to 11.913 percent from last week’s 12.174 percent, while the 364-day T-bills went down slightly by 6.2 basis points to 12.632 percent from the pervious week’s 12.694 percent.

Tenders for the T-bills totaled P10.618 billion, with full awards of P2.350 billion for the three-month T-bills, P4.268 billion for the six-month tenor and P4 billion for the one-year tenor.

Edeza said that overall confidence in the financial market is still high despite the recent decision of the Bangko Sentral ng Pilipinas (BSP) to keep its key rates unchanged at 11 percent and 13.25 percent for borrowing and lending windows, respectively.

Edeza said government will consider increasing the volume of T-bills offered. Average tenders for the weekly auction usually reach about P10 billion which is more than twice the offering of P4 billion.

The prospects of a further decline in T-bill rates, however, will depend largely on how the US Federal Reserve moves on its own key rates, along with the inflation rate, Edeza said.

Meanwhile, BSP Governor Rafael Buenventura said the peso will continue to be stable this week.

"The peso will remain s steady this week. What we are seeing now is that the peso is tracking the macro-economic conditions in the country. The peso’s movement is now more dictated by demand-supply rather than being driven by political forces which used to be the case," the BSP chief added. – Rocel Felix