T-bill rates fall to historic lows

The yields on treasury bills on Monday fell to historic depths of below 1 percent as liquidity indicators in Asia also plunged to record lows as measured by credit-watcher Moody’s Investor Services.

The yield on the 91-day bills eased further to 0.438 percent, which was 54.1 basis points lower than the 0.979 percent set in the previous auction two weeks ago.

Monday’s average for the benchmark debt paper was 41.2 basis points lower than the corresponding rate for deals done in the secondary market, which averaged at 0.85 percent.

Interest rate on the 182-day bills also fell 31.8 basis points to an average 0.682 percent while those for the 364-day paper slid 55.6 basis points to 0.944 percent.

The average for the six-month bill was 26.8 basis points lower than the prevailing average for deals at the Philippine Dealing and Exchange Corp., which was 0.95 percent. The average for the year-long bills was 40.6 basis points lower than the 1.35-percent rate in the secondary market.

National Treasurer Roberto B. Tan said the auction results showed the deep liquidity in the domestic financial market.

“Investor’s appetite may have been influenced also by the very good economic fundamentals in the country as well as an anticipation” that monetary authorities would not change policy rates this month, Tan said.

Tenders for the three-month bills reached P12.57 billion, or more than six times the P2 billion offer. Bids for the six-month securities reached P14.55 billion, or more than four times the P3 billion available. Tenders for the year-long paper totaled P15.65 billion, almost four times the offer of P4 billion.

With tenders totaling P42.77 billion, the government raised P12.6 billion, or higher by about a quarter than the planned 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 all tenors were less than a quarter of total tenders for each tenor. This allowed an additional award of P800 million, P1.2 billion and P1.6 billion for the three maturities.

Meantime, Moody’s said in a statement that its Asian Liquidity Stress Index fell to a record low in August with just 9.7 percent, or some 10 names out of 103 in a list of speculative-grade companies indicating inadequate liquidity.

“The index, which declines when corporate liquidity increases, has been between 11 percent and 13 percent since the start of the year, and was at 11.4 percent in July,” Moody’s senior credit officer Laura Acres said.