Treasury bill yields decline

Rates for the 182-and 364-day Treasury bills (T-bills) eased during yesterday’s auction due to investors’ renewed appetite for government debt papers.

The yield for the 182-day T-bill declined to 6.476 percent, lower than the previous rate of 6.483 percent.

The government awarded P3 billion worth of the paper as total tenders reached P6.522 billion.

Similarly, the average rate of the one-year paper declined to 6.745 percent from 6.950 percent previously. Total tenders reached P12.445 billion as the government awarded P3 billion worth of the paper.

Finance Undersecretary and Acting National Treasurer Roberto Tan said there is renewed appetite for government debt papers especially after the Bangko Sentral ng Pilipinas (BSP) announced that it would start collecting 20-percent withholding tax on overnight placements.

“Government securities became more attractive,” he told reporters after the auction.

Last week, the central bank announced that it would start collecting the final 20-percent withholding tax on overnight placements. 

In a circular issued last Aug. 22, 2008, BSP Governor Amando M. Tetangco Jr. said the tax would be collected retroactively to Jan. 1, 2008.

Tetangco noted that under the National Internal Revenue Code (NIRC), the reverse repurchase transactions of the BSP and banks were included in the definition of the term “deposit substitutes.”

These so-called deposit substitutes are all subject to 20-percent final withholding tax. As such, the BSP said it would start withholding the tax on its overnight reverse repurchase transactions.

Tan said the tax on overnight placements made government securities more attractive and competitive.

Asked if he sees the trend continuing, Tan said it was difficult to tell.

“It depends because there’s always a need for RRPs,” he said.