Brimming with cash, banks line up for gov’t IOUs

With another round of reduction in banks’ reserve requirement next week to release more liquidity into the system, T-bill yields again declined across the board Monday with the Bureau of the Treasury selling all P15 billion in IOUs offered.

The Treasury awarded P4 billion in the benchmark 91-day debt paper at a 4.453-percent yield, down 10.2 basis points (bps) from 4.555 percent last week.

It also sold P5 billion in 182-day Treasury bills at 4.856 percent, down 6.7 bps from 4.923 percent previously.

The 364-day T-bills, all P6 billion of it, fetched a yield of 5.05 percent, down 1.9 bps from last week’s 5.069 percent.

In a statement, the Treasury said the average rates for all three tenors were below secondary market levels.

In all, tenders totaled P43.1 billion, making the auction almost three times oversubscribed.

National Treasurer Rosalia V. de Leon told reporters after the auction the strong investor participation during Monday’s T-bill sale was mainly due to a “very liquid position of the market.”

De Leon noted banks’ reserve requirement ratio (RRR) would again be cut by 50 bps next week, the second of three tranches.

Yields also fell on expectations that while the US Federal Reserve was seen keeping interest rates steady this week, there was a high likelihood of a cut during its next meeting amid sluggish growth and escalating tension with trade partners such as China, de Leon added.