Treasury-bill rates down across the board

The rates of the government’s Treasury bills (T-bills) declined during yesterday’s auction due to improving investor confidence brought about by easing inflation.

The average rate of the 91-day T-bill declined by 70.6 basis points to settle at 4.294 percent from five percent previously. This is the government’s second Treasury bill auction for the year.

The government’s auction committee accepted P1 billion worth of offers as total tenders reached P2.78 billion.

The average rate of the 182-day paper declined by 68.3 basis points to 4.565 percent from 5.248 percent previously. The government’s auction committee awarded P2.5 billion worth of the paper as total tenders reached P7.180 billion.

Similarly, the average rate of the 364-day paper declined by 61.2 basis points to settle at 4.761 percent, from 5.373 percent previously. The auction committee accepted P3.5 billion out of total tenders of P9.360 billion.

Tan said that aside from strong liquidity in the market, easing inflation has also helped revive investor appetite for government debt papers.

The country’s inflation rate settled at eight percent in December, from 9.9 percent recorded in the previous month. The latest inflation figure brought the average inflation rate for 2008 to 9.3 percent.  In August last year, inflation reached a 17-year high of 12.5 percent.

With easing inflation, analysts expect the Bangko Sentral of Pilipinas (SBP) to cut key policy rates on January 29, its next rate-setting meeting. The central bank’s overnight borrowing rate is currently at 5.5 percent while the overnight lending rate is currently at 7.5 percent.

Tan also said that the successful bond exchange offer last week by the Bureau of the Treasury also boosted investor confidence.