Treasury sells P15B in T-bills as rates fall farther

The Ayuntamiento de Manila which houses the Bureau of the Treasury (From the Facebook account of the bureau)

MANILA, Philippines — The Bureau of the Treasury on Monday sold all P15 billion in T-bills as a more liquid market coupled with expectations of monetary easing here and abroad pulled down rates farther across the board.

The Treasury awarded P4 billion in the benchmark 91-day debt paper at an average rate of 3.883%, down 50.2 basis points (bps) from 4.385% during the previous auction.

It also sold P5 billion in 182-day treasury bills at 4.238%, down 48.5 bps from 4.723% previously.

The P6 billion in 364-day IOUs, meanwhile, fetched an annual rate of 4.736%, down 25 bps from 4.986%.

The yields were below secondary market rates, the Treasury said in a statement.

Tenders across the three tenors totaled P50.5 billion, making the auction over thrice oversubscribed.

National Treasurer Rosalia V. de Leon told reporters after the auction that the “excellent turnout” in the volume of bids came on the back of additional liquidity injected into the system following the first tranche of reduction in banks’ reserve requirement ratio (RRR).

It also helped that “supply is very limited” as the Treasury reduced the total offerings of government securities for the third quarter to P230 billion from P315 billion in the second quarter, she said.

“We have downsized our T-bills issuance so the demand is higher but supply is lower,” she noted.

De Leon also pointed to signs of another interest rate cut by the Bangko Sentral ng Pilipinas (BSP) after inflation fell to a 22-month low of 2.7% last month, on top of market consensus that the US Federal Reserve would cut interest rates by 25 bps this month.

(Editor: Alexander T. Magno)