91-day T-bill rate hits new low of 0.568%

MANILA, Philippines—The yield on the 91-day treasury bills fell to a new historic low of 0.568 percent as Monday’s government auction got mixed results.

This was 11.2 basis points lower than the 0.68 percent set in the previous auction two weeks ago.

On the other hand, interest rates on the 182-day bills rose 5.2 basis points to an average 0.95 percent while those on the 364-day securities increased 6.4 basis points to an average 2.032 percent.

Rates for the benchmark bills and the 182-day paper were lower than those for done-deals in the secondary market, which settled at 0.725 percent and one percent, respectively.

However, the primary market average for the 364-day bills was higher than the 2-percent yield set in the secondary market.

National Treasurer Roberto B. Tan said Monday’s rates were a result of “a confluence of news” that were favorable to maintaining the current monetary policy.

One such news was about the “US Federal Reserve’s neutral stance, for the moment, about their policy rates, which influence the decision of other central monetary authorities” like the Bangko Sentral ng Pilipinas, Tan said.

The BSP was the last central bank in the region to increase its policy rates from their financial crisis levels, recently cranking up by 25 basis points its overnight borrowing rate to 4.25 percent and its overnight lending rate to 6.25 percent.

Tan also cited recent positive reports on the government’s first-quarter fiscal position that he said indicated that Malacañang’s economic program was turning out to be effective.

Last week, the Bureau of the Treasury reported that the deficit for January-March settled at P26.2 billion, or less than a quarter of the planned P112 billion.

Tan added that Monday’s auction was influenced by inflation figures remaining within the target range that the BSP adopted.

As of the first quarter, the inflation rate averaged 4.1 percent, well within the BSP’s goal of between 3 and 5 percent.

On Monday, investors brought forward a total of P21.82 billion worth of bids as against the P9 billion on offer.

Tenders for the three-month bills reached P6.43 billion, or more than four times the P1.5-billion offering. Bids for the six-month bills totaled P6.65 billion, or almost twice the P3.5 billion offered, while those for the year-long securities reached P8.74 billion, more than twice the P4 billion being sold.

The Treasury raised a total of P9.6 billion from all three maturities, exceeding the original offer that totaled P9 billion.

Bidding rules allow the Treasury to double the amount it would award for non-competitive bids if, for a given tenor, such bids accounted for less than a quarter of all tenders.

Non-competitive bidders do not indicate a rate in their tenders and they will get the resulting average rate when their bids are accepted.

In Monday’s case, non-competitive bids for the 91-day bills were less than a quarter of total tenders for each tenor, which allowed an additional award of P600 million.