Yield of 91-day treasury bills now at 0.001%

Treasury bill rates fell to new record lows—with the yield for the 91-day securities dropping to a mere 0.001 percent—as the latest investment grade for the Philippines and the shutdown of the US government drove demand for the debt paper.

The Bureau of the Treasury on Monday said that favorable domestic factors and unfavorable external developments further brought down the Philippine government’s costs of short-term borrowing.

“The market seems to be affected by what’s happening in the United States and influenced by the investment grade from Moody’s,” Deputy Treasurer Eduardo Mendiola said in a briefing after the regular treasury bills auction.

The rate for the 91-day bills fell sharply by 86.5 basis points as bids for the three-month government securities overwhelmed the Treasury (BTr) to hit P38.59 billion. The Treasury was only selling P4 billion worth of three-month paper.

Similarly, the rate for the 182-day bills fell by 83 basis points to only 0.09 percent.

The six-month government securities were also oversubscribed, with bids amounting to P35.46 billion compared with the P6 billion offered for sale.

The rate for the 364-day bills decreased by 76.5 basis points to just 0.19 percent. Bids for the one-year government securities reached P34.61 billion compared with the P10 billion being sold.

Although the record-low rates made it tempting for the government to borrow more than its immediate requirements, Mendiola said the Treasury did not find the need to sell more bills than what was stated in the borrowing schedule.

“The government has sufficient liquidity,” Mendiola said.

The drop in the treasury bill rates came after Moody’s Investors Service last week upgraded the credit rating of the Philippines by a notch, or from speculative to the minimum investment grade of Baa3. The decline in treasury yields also followed the ongoing shutdown of the US government.