T-bill yields fall on news of ratings boost

Interest rates on treasury bills fell across the board to record lows in the wake of Fitch Ratings’ upgrade of the government’s long-term foreign credit to investment grade.

The yield on the bellwether 91-day T-bill dropped by four basis points to 0.04 percent. This was 21 basis points lower than the prevailing corresponding rate in the secondary market.

Rates on the 182-day bill eased by 5.4 basis points to average 0.216 percent, while those for the 364-day bill plunged by 26.3 basis points to average 0.307 percent.

Compared to rates at the Philippine Dealing and Exchange Corp. (PDEx), the results were lower by 10.9 basis points and 44.3 basis points, respectively.

In an interview after the auction, National Treasurer Rosalia V. de Leon said such results were to be expected following Fitch’s upgrade.

Last Wednesday, Fitch upgraded the country’s credit to investment grade, citing improvements in the government’s fiscal management, a strong monetary policy-making framework, a persistent current account surplus, and ongoing governance reforms, apart from the resiliency of the Philippine economy.

On Monday, the Bureau of Treasury raised P20 billion as planned. Investors tendered a total of P30.2 billion—one and a half times the total offered volume.

For the benchmark bill alone, tenders reached P6.98 billion—almost twice the P2 billion offered.

Lenders made available P9.1 billion for the 182-day bill and P14.1 billion for the 364-day paper, greater than the respective offers of P6 billion and P10 billion.

Although tenders continued to exceed offers, investor appetite was light compared to previous auctions when subscriptions for any tenor were at least double the amount being offered.

De Leon said this was because lenders were hungrier for T-bonds, especially the longer tenors that promised greater yield.

Monday’s auction, she said, indicated ample liquidity in the domestic financial market.

“If you look at the year-to-date trade volume, I think this has reached about P2 trillion,” De Leon said, citing PDEx data. “Half of that was registered in March alone.”

She said these levels were unprecedented for both periods, meaning that they were the highest amounts for any quarter or month.