T-bill yields down further on banks’ big appetite

The Bureau of the Treasury sold all P15 billion in T-bills it offered on Monday as rates again fell across-the-board amid ample liquidity and expectations of further monetary easing here and in the United States.

The Treasury awarded P4 billion of the benchmark 91-day debt paper at an average rate of 3.769 percent, which went down 11.4 basis points (bps) from 3.883 percent previously.

It also sold P5 billion worth of 182-day IOUs at a yield of 4.1 percent, down 13.8 bps from 4.238 percent previously.

The 364-day securities, which sold P6 billion, fetched a rate of 4.519 percent, down 21.7 bps from 4.736 percent.

The rates were below secondary market levels given robust market demand, the Treasury said in a statement.

Tenders across the three tenors totaled P74.3 billion, making the auction nearly five times oversubscribed.

“We are pleased with the results of the auction. While earlier in our survey the comments made by the banks, particularly for the 91-day—it would move 5-10 bps, but as we saw … tenor buckets were expelled by more than 10 bps,” National Treasurer Rosalia V. de Leon told reporters.

The strong auction demand reflected market expectations given another 50-bp reduction in banks’ reserve requirement ratio by the end of this month, De Leon said. A reduction would mean more cash in the system.

The market was also reacting to Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno’s earlier statement that there would be further policy easing, she said.

The US Federal Reserve, meanwhile, was expected to cut policy rate by 25-50 bps when members meet by the end of July, she added.

“So there’s really a convergence in terms of: first, the reduction in the interest rate; and second, stronger liquidity that we’ll be seeing in the market,” De Leon added. —BEN O. DE VERA