Treasury bill rates down across the board

MANILA, Philippines – Treasury bill (T-bill) rates fell across the board during yesterday’s auction due to easing inflation concerns of market investors and a healthy appetite for government debt papers, National Treasurer Roberto Tan said yesterday.

The average rate of the 91-day T-bill declined to 4.352 percent during yesterday’s auction from 4.421 percent previously.

Total tenders for the paper reached P2.8 billion as the government’s auction committee awarded P1.5 billion.

For the 182-day Treasury bill, the average rate stood at 4.541 percent from the previous rate of 4.653 percent. The government made an award of P2.5 billion as total tenders reached P8.28 billion.

The 364-day paper’s average rate declined to 4.710 percent from 4.729 percent previously. Total tenders for this paper reached P6.732 billion but the government awarded only P3.5 billion.

Tan attributed the strong investor appetite for government debt papers to easing inflation concerns.

The National Statistics Office (NSO) reported yesterday that the country’s headline inflation rate in March eased to 6.4 percent from the 7.3 percent inflation rate recorded in February.

Core inflation, meanwhile, continued to slow down to 5.6 percent in March from 6.4 percent in February. The rate that measures the change in average consumer prices excluding certain items with volatile price movements such as food products and energy, core inflation for the first quarter of 2009 averaged 6.3 percent.

Investors’ expectation of further monetary easing also improved appetite in the market, Tan said.

The Philippine central bank cut interest rates by 25 basis points last March 5 to 4.75 percent for the overnight borrowing rate and 6.75 percent for the overnight lending rate.  Monetary authorities have cut policy rates by 125 basis points in the last three months as part of efforts to stimulate the economy by encouraging banks to lend.

Central bank officials hinted that there maybe further monetary easing given the decelerating inflation in the country.

Investors swamped yesterday’s auction despite worries on the government’s budget gap. The budget deficit in the first two months of the year more than doubled to P67 billion from the P32.9 billion recorded in the same period last year. –Iris C. Gonzales, Philippine Star