T-bill rates decline further

MANILA, Philippines — Rates for short-term government securities continued their downward trend yesterday as market demand remained healthy amid strong liquidity in the financial system, according to the Bureau of the Treasury (BTr).

During yesterday’s auction, the 91-day Treasury bills (T-bills) fetched an average rate of 0.846 percent, 7.1 basis points lower compared to the 0.917 percent recorded last week.

The P5 billion offering was more than four times oversubscribed, with total tenders amounting to P21.6 billion.

Healthy demand, coupled with lower rates, prompted the auction committee to double the accepted non-competitive bids, resulting in a total awarded volume of P7 billion instead of P5 billion.

The average rate for the 182-day debt papers likewise dropped by 11.6 basis points to 1.094 percent from 1.21 percent a week ago.

Total tenders amounted to P29.834 billion, almost six times larger than the original offer volume. Like the three-month tenor, the BTr also upsized the awarded volume to P7 billion from P5 billion as it doubled the accepted non-competitive bids.

Lastly, rates for the 364-day securities averaged at 1.446 percent, 4.6 basis points down from 1.492 percent last week.

The P10 billion offering was fully awarded, while total tenders reached P43.915 billion.

In total, the auction attracted P95.349 billion in bids, of which P24 billion was awarded.

National Treasurer Rosalia de Leon said rates continued to decline this week even amid a high inflationary environment. She said this was due to the robust liquidity in the market.

“Liquidity remains strong with P20 billion maturity this week. Price pressures are seen as temporary and will be alleviated with measures like price caps and food imports,” de Leon said.

Sought for comment, a bond trader agreed that yesterday’s auction results were driven by the strong liquidity. “The market preference is now on the shorter end of the curve following the higher-than-expected inflation last January, ‘’ the trader said.

Investors are also looking forward to the government’s retail Treasury bond (RTB) offering today.

“We still expect strong demand, and the market indication is around 2.25 to 2.375 percent,” the trader said, adding that the three-year tenor is a sweet spot for investors.

Last week, the BTr announced that it will offer at least P30 billion worth of three-year RTBs to beef up the state coffers and manage its liabilities.

The price-setting auction will start today. The offering will end on March 4, while the target settlement date is on March 9.

Aside from fresh investments, participants of the 25th RTB tranche will also get the opportunity to swap their old bonds maturing this year for the new debt papers.