Benchmark T-bill rate drops to 0.900%

MANILA, Philippines – Treasury bill (T-bill) rates declined across the board yesterday as investors scrambled for government debt papers.

Investors opted to park more funds in the government’s 91-day Treasury bill (T-bill) instead of the longer-term papers because of uncertainties in the inflation environment.

Inflation rose to 4.3 percent in February, from only 3.6 percent in January, according to the National Statistics Office (NSO). The Bangko Sentral ng Pilipinas (BSP) expects inflation to rise as much as five percent in March.

The Bureau of the Treasury sold P9.6 billion worth of 91, 182 and 364-day T-bills, with demand for the three-month paper reaching P6.535 billion.

The average rate of the 91-day T-bill declined to 0.900 percent from 1.125 percent, allowing the government to sell P2.1 billion or higher than the original offer of P1.5 billion.

Similarly, the average rate of the 182-day T-bill dropped to 1.205 percent from 1.753 percent previously.

For this paper, investors tendered a total of P11.220 billion. The government made a full award of P3.5 billion for this paper.

The one-year paper, meanwhile, fetched an average rate of 2.191 percent, also lower than the previous rate of 2.865 percent.

For this paper, the government sold all P4 billion that it offered as total tenders reached P14 billion.

National Treasurer Roberto Tan said there is strong demand for short-term placements.

“There’s still some expectations on inflation and this is creating uncertainty which is why they like to park their funds in longer term placements,” Tan said.

Yesterday’s debt sale is part of the second quarter borrowing program of P117 billion.

Of the P117 billion, the government has programmed to sell P63 billion worth of Treasury bills from April to June and P54 billion worth of T-bonds.

Under the planned borrowing schedule for the second quarter, the Treasury increased anew the size of its T-bill auctions to P9 billion from P8.5 billion previously.

Tan said this is because of the strong appetite for 91-day paper.

For T-bonds, the Treasury maintained the auction size at P9 billion, similar to the previous quarter. Furthermore, the Treasury is selling 4, 7 and 10-year debt papers.

The government issues Treasury bills and bonds to finance its budget deficit. This year, the government is eyeing to contain the budget deficit at P300 billion this year or 3.2 percent of total economic output.

Last year, the budget gap hit P314.4 billion or 3.7 percent of gross domestic product. –Iris C. Gonzales (The Philippine Star)