Treasury-bill rates down for all tenors

MANILA, Philippines – Treasury bill (T-bills) rates fell across the board during yesterday’s auction on the back of hefty inflows from investors and optimism on the economy.

Yield for the 91-day T-bill, the benchmark used by banks for their lending rates, fell to 3.575 percent, the lowest since November 2007 when the average rate of the three-month paper hit 3.30 percent. Yesterday’s rate was 32.5 basis points lower than the previous week’s 3.9 percent.

Investors tendered a total of P5.890 billion for this paper, out of the P1 billion offered by the government.

The yield on the longer-term T-bills also slowed down with the 182-day T-bill fetching an average rate of 3.935 percent from 4.2 percent or down 26.5 basis points.

The government made a full award of the P2.5 billion-offer as total tenders amounted to P13.660 billion for the 182-day paper.

The 364-day T-bill averaged at 4.134 percent from 4.415 percent or a drop of 28.1 basis points. Tenders for this paper totaled P13 billion, or more than three times the P3.5 billion offered to investors.

National Treasurer Roberto Tan attributed yesterday’s auction results to the general decline in interest rates and to the low inflation environment.

T-bill rates usually go down when investors expect inflation to stay low.

“Rates have really declined. There’s a lot of portfolio inflows and these are being recycled into government securities until they have use for it,” Tan told reporters after the auction.

Market analysts said that should the slowdown in yields continue, the government could consider raising its T-bill offering volume from the current P7 billion to take advantage of cheaper funds.

When asked about his expectations on interest rates, Tan said it was too difficult to foresee until when the yields would continue to fall. “It’s something that needs study,” he noted.

What’s clear, Tan said, is that the market is very liquid and that investors are optimistic on the economy, which makes them comfortable parking their funds in government securities. –Iris C. Gonzales (The Philippine Star)