Treasury bill rates down across the board

MANILA, Philippines – Treasury bill (T-bill) rates dropped across the board in yesterday’s auction amid strong demand for government debt papers and the high level of liquidity in the market, Deputy Treasurer Eduardo Mendiola said yesterday.

The average rate of the 91-day T-bill rate declined to 3.9 percent from 3.987 percent previously.

Total tenders for this paper amounted to P5.870 billion, allowing the government to make a full award of the P1 billion it offered.

For the 182-day debt paper, the average rate fell to 4.2 percent from 4.295 percent previously or a drop of 9.5 basis points.

The government made a full award of P2.5 billion as investors tendered a total of P13.060 billion for this paper.

Similarly, for the 364-day T-bill, the government successfully sold P3.5 billion as investors tendered a total of P9 billion.The average rate for this paper stood at 4.415 percent from 4.459 percent previously.

Mendiola attributed the behavior of the market to a combination of factors including low inflation and an increase in demand for debt papers amid a reduction in the government’s fourth quarter borrowing program.

The government has programmed to borrow P75 billion from the local debt market in the fourth quarter of the year, lower than the third quarter borrowing program of P107.5 billion, according to the latest data from the Bureau of the Treasury (BTr).

Of the amount, the government plans to issue P35 billion worth of T-bills, P13 billion lower than the previous quarter’s P48 billion T-bill offering.

The Treasury, meanwhile, plans to sell P40 billion worth of Treasury bonds (T-bonds), also lower than the P59.5 billion programmed T-bond offering last quarter.

Meanwhile, Mendiola said the positive outlook on the fiscal side also improved investor appetite for government debt papers.

“On the fiscal side, we are able to manage our deficit and on the monetary side, inflation has been moderate,” he said.

As such, Mendiola said there was no need to borrow more than its offering.

The government borrows from the local debt market through the issuance of Treasury bills and bonds.

As of end-August this year, the budget deficit stood at P228.1 billion or above the budget gap recorded in the same period last year of P210 billion.

In August alone, the government managed to record a surplus of P1.3 billion, an improvement from the deficit recorded in the same period last year of P22 billion. –Iris C. Gonzales (The Philippine Star)