T-bills fetch lower rates

MANILA, Philippines — Rates for short-term government securities plunged yesterday following the central bank’s surprise 50-basis-point rate cut last week, according to the Bureau of the Treasury (BTr).

During yesterday’s auction, the 91-day Treasury bills (T-bills) fetched an average rate of 1.746 percent, 32.2 basis points lower than the 2.068 percent recorded last week.

Healthy demand met the P5 billion offering, with total tenders amounting to P28.74 billion. This allowed the auction committee to upsize the accepted volume to P7 billion.

The average rate for the 182-day securities likewise declined by 26.7 basis points to 1.892 percent from 2.159 percent a week ago.

The BTr made a full award of P5 billion for the six-month debt papers as total tenders reached P32.173 billion.

Lastly, rates for the 364-day T-bills averaged at 1.98 percent, 42.8 basis points lower than the 2.408 percent posted in the previous auction.

The P10 billion offering was more than 7.5 times oversubscribed, with total bids amounting to P70.638 billion. This prompted the auction committee to double the accepted non-competitive bids, and upsize the awarded volume to P14 billion.

Overall, the BTr was able to raise a total of P26 billion from the fund raising activity, exceeding the target size of P20 billion. Total tenders reached P131.451 billion.

“Rates declined in the aftermath of anticipated 50-basis points reduction in interest rates,” National Treasurer Rosalia de Leon told reporters in a text message.

Last week, the Bangko Sentral ng Pilipinas (BSP) decided to cut the overnight reverse repurchase rate to a record low of 2.25 percent. The overnight deposit and lending rates were also reduced by 50 basis points to 1.75 percent and 2.75 percent, respectively.

BSP Governor Benjamin Diokno said the monetary measure aims to boost market confidence and further mitigate the downside risks to growth.

Given strong demand from the market, De Leon said the auction committee decided to open the tap facility for 364-day T-bills, for an additional volume of P10 billion.

Asked if there is space to ramp up domestic borrowings given low rates and ample liquidity, De Leon said “we also do not want to crowd out the private sector.”

However, she said a possible retail treasury bond (RTB) issuance is always on the table.

“RTB is always an option for us to raise funding and for small investors to deploy funds in supporting government priorities at this time, particularly in the battle against COVID-19,” De Leon said.