The 91-day T-bill – which banks use to set their lending rates –fetched an average rate of 7.161 percent, down 49.7 basis points from the previous accepted rate of 7.658 percent on April 12.
National Treasurer Mina Figueroa said investors in government securities, particularly banks, offered rates for the shorter tenors in reaction to recent opinion polls that have incumbent Mrs. Arroyo widening her lead in the May 10 presidential elections.
"It’s still the surveys. She is the market’s candidate," Figueroa said yesterday.
Analysts said investors perceive Mrs. Arroyo, an economist, as more market-friendly than Poe, a political novice and a high school drop-out.
The 91-day yield had been rising steadily since Jan. 19.
The Bureau of Treasury (BTr) made a full award of P3.5 billion. Banks submitted total tenders of P7.707 billion.
"It’s not so much a personality preference as it is a preference for the status quo," traders said. "Financial markets have always been conservative – the less likelihood of uncertainty, the better for the market," they added.
Rates for the 182-day T-bills averaged 8.367 percent, against the previous 8.661 percent, on total tenders of P4.845 billion, against an offering of P3 billion. Bids ranged from 8.23 percent to 8.5 percent.
As for the 364-day T-bill, the government accepted tenders of only P2.25 billion, out of total tenders of P3.365 billion, to temper the increase in rates, ranging from 8.73 percent to 9.125 percent.
The one-year rate averaged 8.897 percent, against 8.384 percent previously.
"There is no more uncertainty (in the market) there is liquidity and we are enjoying a healthy cash position," Figueroa said.
According to Figueroa, the BTr’s rejections in February and March to prevent rates from increasing contributed to the liquidity.
Investors in government securities, particularly banks, submitted rates in reaction to positive sentiments leading to the May 10 vote.
Traders said the "instability" factor appeared to have dissipated and the continued appreciation of the peso vis-à-vis the dollar also had trickle-down effects on interest rates.