T-bill rates sink to historic lows

MANILA, Philippines - Interest rates on the 91-day and 182-day Treasury bills (T-bills) sank to historic lows due to increased liquidity in the financial market and a favorable economic environment.

At the regular auction held by the Bureau of Treasury Monday, the yield on the benchmark 91-day bills fell to 0.05 percent from 0.198 in December.  The rate for the 182-day securities declined to 0.3 from 0.52 percent while that for the 364-day paper went up to 0.763 percent.

National treasurer Rosalia de Leon attributed the decline in the yields to the relatively low and falling inflation rate and a surge in foreign inflows.

“This is good for us.  It signifies to rating agencies that the Philippines is already at investment grade,” De Leon said.

The Treasury raised a total of P15.8 billion, higher than the programmed debt sale of P15 billion.  Investors tendered a total of P102.88 billion or more than six times the total offering.

The 91-day T-bill rate is generally used by banks in pricing their loans. 

The government has programmed to borrow P120 billion from the local debt market in the first quarter, higher than the P90 billion programmed during the same period.

Based on the new borrowing program, the government will auction P15 billion worth of T-bills on Jan. 9, Feb. 6 and March 6, 2013 or a total of P45 billion. The P15 billion is double the current T-bill auction size of P7.5 billion.

The government is also set to auction P25 billion worth of T-bonds per auction date on Jan. 24 (seven-year T-bonds); Feb. 21 (10-year T-bonds); and on March 21 (20-year T-bonds). The P25 billion is more than double the current T-bond auction size of P9 billion.