T-bills rates pulled down further by US interest rate, bank reserve cuts

More money in the system and interest rate cuts in the US further pulled down T-bill yields helping the Bureau of the Treasury sell all P15-billion worth it offered Monday (Aug 5).

The Treasury awarded P4 billion in 91-day debt paper at an average rate of 3.398 percent, down 37.1 basis points from 3.769 percent previously.

It also sold P5 billion in 182-day IOUs at 3.677 percent, down 42.3 bps from 4.1 percent.

The P6 billion in 364-day treasury bills fetched an annual rate of 3.898 percent, down 62.1 bps from 4.519 percent during the auction two weeks ago.

In a statement, the Treasury said the rates fell across-the-board, and below secondary market rates.

Tenders across the three tenors totaled P87.1 billion, making the auction nearly six times oversubscribed.

“We were swarmed by offers not only in terms of the volume but also in terms of how deep-dive the rates are,” National Treasurer Rosalia V. de Leon told reporters after the auction.

De Leon said the bid volume was boosted by the liquidity released by the cut in banks’ reserve requirement ratio (RRR).

As for the declining rates, de Leon attributed them to the US Federal Reserve’s “insurance” rate cut last week.

“There’s also a lot of Asian central banks on the road to easing. And there’s also the high probability that the market is pricing a 25-bp cut by the central bank [Bangko Sentral ng Pilipinas] when they meet on Aug. 8 for the Monetary Board policy meeting. All those confluence of reasons, so they are now just parking the funds with the treasury bills,” De Leon added./TSB