Treasury bill yields down across the board

MANILA, Philippines – Treasury bill (T-bill) rates went down across the board yesterday as investors swamped the auction following a rejection of bids for Treasury bonds (T-bonds) last week.

As such, the government successfully sold all P6.5 billion worth of 91, 182 and 364-day T-bills auctioned off yesterday.

“I think we sent a strong signal during the last auction with the rejection. That was a factor in demonstrating our position that we were ready to reject unreasonable yields or which were not in line with secondary market rates,” National Treasurer Roberto Tan told reporters after the auction.

The average rate of the 91-day T-bill declined to 3.897 percent or 9.5 basis points lower than the previous rate of 3.992 percent. The highest offer was 3.899 percent while the lowest bid stood at 3.875 percent.

Investors tendered a total of P5.4 billion for the three-month paper, of which the government accepted P1 billion as programmed.

The 182-day T-bill fetched a rate of 4.138 percent, with the highest bid at 4.150 percent and the lowest at 4.099 percent. This was 10.6 basis points lower than the previous rate of 4.244 percent.

Total tenders reached P9.541 billion. The government’s auction committee accepted P2 billion as planned.

For the one-year paper, the average rate shed 2.7 basis points to 4.368 percent from the previous rate of 4.395 percent.

The highest bid stood at 4.390 percent while the lowest offer was 4.295 percent.

Investors tenderd P7.665 billion, of which the government accepted P3.5 billion.

Tan attributed yesterday’s auction results to strong liquidity in the market, saying that investors are still looking for safe havens such as government debt papers wherein they can park their funds.

“We had P24 billion in maturities this week. It’s a very liquid market,” Tan said.

Last week, the government rejected all bids for its seven-year T-bonds as banks submitted high offers for the debt paper on sale.

Had the government’s auction committee accepted the bids, the average rate would have risen to 7.482 percent from 6.678 percent. The bids ranged from 7.360 percent to 7.490 percent.

The government borrows from the local and foreign markets to fund its budgetary needs.

This year, it hopes to contain the budget deficit at P250 billion or 3.2 percent of gross domestic product (GDP). –Iris C. Gonzales (The Philippine Star)