Treasury bill rates down for all tenors

Treasury bill (T-bill) rates declined across the board during yesterday’s auction, the first T-bill auction for the year, because of easing inflation and strong liquidity in the market.

“There’s a big maturity this week so there’s a lot of liquidity in the market,” National Treasurer Roberto Tan told reporters.

The average rate of the 91-day paper declined by 112 basis points to five percent from 6.122 percent previously. The government’s auction committee awarded P1 billion worth of the paper as total tenders reached P3.590 billion.

Similarly, the average rate of the 182-day paper declined by 145 basis points to settle at 5.248 percent, from 6.7 percent previously. The auction committee accepted P2.5 billion out of total tenders worth P7.43 billion.

The average rate of the 364-day Treasury bill, meanwhile, declined by 104 basis points to 5.373 percent from 6.414 percent. Total tenders reached P11.35 billion as the auction committee awarded P3.5 billion.

Tan said that aside from strong liquidity in the market, easing inflation has also helped revive investor appetite for government debt papers.

The country’s inflation rate settled at eight percent in December, from 9.9 percent recorded in the previous month. In August last year, inflation reached a 17-year high of 12.5 percent.

With easing inflation, analysts expect the Bangko Sentral ng Pilipinas (BSP) to cut key policy rates on Jan. 29, its next rate-setting meeting. The central bank’s overnight borrowing rate is currently at 5.5 percent while the overnight lending rate is currently at 7.5 percent.

The government plans to borrow P92 billion from the local debt market in the first quarter of 2009 through the issuance of Treasury bills and Treasury bonds.

The programmed borrowing for the first quarter of next year is P31 billion more than what the government had programmed to borrow in the fourth quarter of 2008 which was P61 billion.

According to the Treasury’s borrowing program for the first quarter of 2009, the government will issue a total of P42 billion worth of Treasury bills and P50 billion worth of Treasury bonds.–Iris C. Gonzales, Philippine Star