Rates for the 91-day T-bills, used by banks in pricing their loans, eased at 6.16 percent from 6.246 percent in the previous auction.
"The market is still very liquid," Deputy National Treasurer Mina Figueroa said yesterday, referring to the drop in the shorter-term T-bills.
Yields for the 182-day T-bills stood at 7.331 percent, down from the previous rate of 7.441 percent. The government awarded in full the P3.5-billion offering against tenders worth P7.578 billion.
Figueroa said the banking system was still very liquid due to its reluctance to lend to the private sector, creating a bulk of funds that have to be invested somewhere.
"With the government left as the only creditworthy borrower in the market, the demand for T-bills picked up and effectively pushed rates down."
The average rate for the 364-day T-bills, on the other hand, went up to 8.18 percent from 8.076 percent in the previous auction.
Interest rates on the benchmark 91-day T-bills are projected to reach an average of 7.5 percent in 2004, especially since the government intended to source the bulk of its borrowing from the domestic market through the sale of government securities.
This projected rate would put the prevailing interest rate above the BSP’s policy rates which has been virtually steady at 6.75 percent since March 2003.
The BTr, however, has been cautious about its borrowing schedule as the Bangko Sentral ng Pilipinas (BSP) raised alarms that the government’s 70-30 borrowing mix could put pressure on the peso.
Finance Secretary Juanita Amatong said the national government was even willing to go as low as 60-40 if market conditions would dictate so in 2004.