Yield on gov’t securities seen staying below 1%

Yields on peso-denominated government securities are likely to remain extremely modest, with Treasury bill rates staying well below 1 percent for the rest of the year.

This was according to The Market Call, which said in its latest issue that benign inflation, increasing domestic savings, favorable fiscal position of the government, and the recently granted investment grades for the country would help keep interest rates on government securities benign.

The bellwether 91-day T-bill rate would likely average at 0.24 percent in November and 0.20 percent in December, said The Market Call.

The projected rates, however, are still higher than the record low of 0.001 percent posted during the Oct. 7 auction.

The record low treasury bill rate was achieved amid an increase in inflows of foreign portfolio investments, which was influenced by expectations that the US Federal Reserve would continue its stimulus program.

It also came after the Philippines bagged an investment grade from Moody’s Investors Service, which was the last of the three major international credit rating agencies to lift Philippine debt out of junk status.

Fitch Ratings and Standard & Poor’s raised their credit ratings for the Philippines from junk status to the minimum investment grade in March and May, respectively.

The Market Call also said the increase in domestic prices would likely be modest despite pressures from rice and oil prices on the back of favorable supply of goods and services.