Treasury bill rates down across the board

MANILA, Philippines - Treasury bill (T-bill) rates dropped across-the-board during yesterday’s auction on the back of strong investor appetite for government debt papers.

National Treasurer Roberto Tan attributed the positive auction results to easing inflation in June and to the decision of the policy-making Monetary Board last week to cut policy rates.

Tan said the lack of corporate issuers in the market also contributed to strong demand for T-bills.

The average rate of the 91-day T-bill dropped to 4.298 percent from 4.500 percent previously or 20.2 basis points lower.

The government’s auction committee made a full award of the P2 billion offering as total tenders reached P7.645 billion.

The average rate of the 182-day debt paper dropped to 4.478 percent, 18 basis points lower than the previous rate of 4.658 percent.

Total tenders for this paper reached P11.172 billion or more than thrice the offer size of P3 billion.

For the one-year paper, the average rate dropped to 4.550 percent, 24.4 basis points lower than the previous rate of 4.794 percent.

The auction committee made a full award of the P3.5 billion offering for the 364-day T-bill as total tenders reached P12.440 billion.

Pleased with the auction results, Tan said easing inflation largely contributed to the strong appetite of investors.

The National Statistics Office (NSO) reported that inflation for June slowed down to 1.5 percent from its year-ago level of 11.4 percent, the lowest rate in 22 years or since April 1987.

The 1.5 percent inflation rate in June brought the first half inflation at five percent or slightly above the forecast of the Development Budget Coordination Committee (DBCC) of 2.5 percent to 4.5 percent.

Aside from easing inflation, Tan said news that the Bangko Sentral ng Pilipinas (BSP) remitted P6 billion in dividends to the Treasury also contributed to strong investor confidence.

Under Republic Act 7656 or the Dividends Law of 1994, Government Owned Controlled Corporations (GOCCs) and Government Financial Institutions (GFIs) are required to remit half of the income earned in each fiscal year to the National Government. The remittance should be in the form of cash or in real estate properties with clean titles.

The BSP remitted P6 billion in dividends after posting a net income of P8.927 billion.

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