91-day Treasury bill rate up slightly to 4.421%

MANILA, Philippines – Investors swamped yesterday’s auction for government debt papers as market conditions continue to improve.

The average rate of the 91-day Treasury bill (T-bill) rose slightly to 4.421 percent, just 2.7 basis points higher than the previous rate of 4.394 percent. The highest bid stood at 4.444 percent while the lowest bid fell at 4.339 percent.

The government’s auction committee received total tenders of P2.51 billion for the 91-day paper. It awarded P1 billion worth of the paper.

For the 182-day T-bill, the average rate stood at 4.653 percent, nearly unchanged from the previous rate of 4.654 percent. The highest rate stood at 4.700 percent while the lowest offer stood at 4.600 percent.

For this paper, total tenders for the coupon reached P5.585 billion. The government’s auction committee awarded P2.5 billion worth of the paper.

Similarly, the 364-day Treasury bill fetched an average rate of 4.729 percent or 1.9 basis points lower than the previous rate of 4.748 percent.

Total tenders reached P9.405 billion as the government awarded P3.5 billion worth of the paper.

Deputy Treasurer Eduardo Mendiola said the results of yesterday’s auction were all “aligned with secondary market rates.” “It’s a good auction,” he told reporters.

He said that investors’ expectation of further monetary easing also improved appetite in the market.

The central bank cut interest rates by 25 basis points last March 5 to 4.75 percent for the overnight borrowing rate and 6.75 percent for the overnight lending rate.  Monetary authorities have cut policy rates by 125 basis points in the last three months as part of efforts to stimulate the economy by encouraging banks to lend.

Central bank officials hinted that there maybe further monetary easing.

Investors are also keeping a close watch on the fiscal data for January and February, which is likely to be released this week.

The government has raised its budget deficit target this year to P177.2 billion from a previous goal of P102 billion to allow for more spending to shore up the local economy amid the global downturn.

However, the higher budget deficit goal would entail more debt issuance, and the market is waiting for the Bureau of the Treasury to disclose how big its borrowings would be in the second quarter.–Iris C. Gonzales, Philippine Star