Treasury bill rates down across the board

MANILA, Philippines – Treasury bill (T-bill) rates fell across the board as investors swarmed the first auction of government securities for the second quarter of the year, the Bureau of the Treasury (BTr) reported yesterday.

The benchmark 91-day T-bills – used by banks in pricing their loans – fetched 3.875 percent yesterday or 2.5 basis points lower than the 3.9 percent last March 22. Tenders for the P1.5 billion issuance reached P4.373 billion.

The yield for the 182-day T-bills declined by 1.6 basis points to 4.021 percent from 4.037 percent last March 22. Bids amounted to P8.385 billion and the committee made a full award of P3 billion.

On the other hand, the auction committee capped the increase for the 364-day debt papers. The one-year T-bills fetched 4.385 percent or almost unchanged from the previous rate of 4.386 percent.

The committee made a partial award of P2.55 billion for the P3.5 billion offering as total tenders reached P7.75 billion. Had the committee made a full award, the yield of the one-year T-bills would have gone up by 5.4 basis points to 4.440 percent.

National Treasurer Roberto Tan said in an interview with reporters that investors swamped yesterday’s auction as tenders reached P20.508 billion or more than two and a half times the issue size of P8 billion.

“The auction went as expected with the large volume of bids,” Tan stressed.

He pointed out that over P35 billion worth of government securities are scheduled to mature this week.

He explained that the auction committee was forced to cap the increase in the yield of the one-year debt paper.

“We are not willing to accept the higher rates for the longer tenor. We just tempered the rates for the 364-day T-bills because we don’t want to send a wrong signal,” Tan said.

The Philippines hopes to get back on its fiscal consolidation path starting this year by trimming the budget deficit to P293 billion or 3.5 percent of GDP this year from a record level of P298.5 billion or 3.9 percent of GDP in 2009.

However, the country’s budget shortfall inched up by 4.9 percent to P70.3 billion in the first two monhths of the year from P67 billion in the same period last year due mainly to lower income from treasury operations. –Lawrence Agcaoili (The Philippine Star)