T-bill rates tumble across-the-board

MANILA, Philippines – Yields on Treasury bills (T-bills) tumbled during yesterday’s auction as market investors sought safer facilities to park their funds on the back of jitters brought about by the downgrade in the US credit rating.

Yield for the 91-T-bill stood at 2.073 percent from 2.306 percent previously. Total tenders amounted to P9.620 billion, allowing the government to do a full award of the P2-billion programmed debt sale for the debt paper.

Similarly, the 182-day T-bill fetched a rate of 2.250 percent from 2.784 percent previously.

For this paper, investors tendered a total of P11.075 billion, of which the government accepted P3 billion.

The 364-day T-bill, meanwhile, fetched an average rate of 2.750 percent from 3.236 percent previously. Total bids amounted to P13.768 billion or more than triple the P4 billion offered to investors.

Deputy Treasurer Eduardo Mendiola said that the results of the auction were consistent with what was happening in the US.

“Partly, (the impact) has already reached the region. The market is reacting on risk aversion,” Mendiola told reporters after the auction.

Last week, the US’ credit rating was slashed for the first time as Standard and Poor’s lowered it to AA+, a move that could raise the cost of borrowing for the US government.

The global debt watcher cited the US government’s budget deficit burden and “weak policy-making process.”

Mendiola said that when people retreat from the equities market, they seek other alternatives including the bond market.

He said that while there is no specific evidence yet that this has already happened in the Philippines, such developments can be expected following the downgrade in the US. –Iris C. Gonzales (The Philippine Star)