T-bill rates fall amid monetary easing

Treasury bill rates further fell on Monday amid monetary easing here and abroad, allowing the Bureau of the Treasury to sell all P15 billion offered in yesterday’s auction.

The BTr sold P4 billion in 92-day debt paper at an average rate of 3.254 percent, down 14.4 basis points (bps) from 3.398 percent previously.

It also awarded P5 billion in 183-day treasury bills at 3.471 percent, down 20.6 bps from 3.677 percent two weeks ago.

As for the 365-day IOUs, the Treasury sold the P6 billion worth at 3.636 percent, down 26.2 bps from the previous annual rate of 3.898 percent.

All three tenors were adjusted with one additional day for each as the BTr took into consideration the advance settlement on Tuesday, due to the upcoming Ninoy Aquino Day, a nonworking holiday, on Wednesday (Aug. 21).

Across all tenors, the tenders totaled P45.8 billion, making the auction over three times oversubscribed.

Bids for the 92-day amounted P10.8 billion; for the 183-day, P14.1 billion; and 365-day, P20.9 billion.

Asked when the BTr expects T-bill rates to stabilize, Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction that it could happen when the Bangko Sentral ng Pilipinas would assure the market that inflation would be manageable in the second half of the year and when there would be clarity on further cuts on the reserve requirement ratio and policy rate.

Sta. Ana said the ongoing US-China trade war and possible further easing of the US Federal Reserve rate would also influence the movement of yields.

Meanwhile, Sta. Ana said the government was looking into expanding the repo participants to include non-banks, such as insurance companies, under a comprehensive capital market development roadmap whose crafting is being spearheaded by the BTr.

“We wanted to ramp up activity with respect to the repo market because since we launched it we’ve seen that there’s not much trades put in that market,” Sta. Ana said, adding that market conditions last year and early this year were not conducive to repo trading.

Launched in late 2017, the repo was aimed at enhancing funding and trading liquidity in the domestic bond market.

A repo, short for repurchase agreement, allows a dealer to sell and repurchase short-term government securities such as treasury bills to a lender at a specified future date and an agreed price.

Repos are said to provide lenders low risk and are usually used to raise short-term capital.

Sta. Ana said regulators should put in place a mechanism through which repo participants could hedge their positions or get more liquidity as “apparently it’s not there” yet.