T-bill rates fall on BSP rate cut news

Treasury bill yields fell across the board Monday following last week’s pronouncements of new Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno signaling interest rate cuts.

The Treasury sold all P20 billion in bills at “favorable rates” amid an oversubscribed auction that attracted P31.8 billion in bids across the three tenors.

The P6 billion in benchmark 91-day IOUs were awarded at an average rate of 5.716 percent, down from 5.733 percent previously.

Another P6 billion in 182-day debt paper were sold at 5.936 percent, down from 5.975 percent last week.

As for the P8 billion in 364-day securities, the annual rate declined to 6.018 percent from 6.052 percent previously.

National Treasurer Rosalia V. de Leon told reporters after the auction that the downtrend in rates was the market’s reaction to “what they heard from the [BSP] governor, that there’s now room for monetary easing.”

Amid elevated inflation that averaged a 10-year high of 5.2 percent last year, the BSP’s policymaking Monetary Board raised key interest rates by a total of 175 basis points, making it more expensive to borrow.

Diokno nonetheless said last Friday that the BSP would await fresh data to confirm if headline inflation was really slowing down before it could cut interest rates or lower banks’ reserve requirement, which at 18 percent of total deposits remain the highest in Asean. —BEN O. DE VERA