T-bill rates fall across the board amid easing inflation

The Bureau of the Treasury on Monday sold all P20 billion worth of T-bills it offered as rates fell across the board amid easing inflation.

The Treasury awarded P8 billion in benchmark 91-day debt paper at 2.995 percent, down 4.2 basis points from 3.037 percent previously.

It also sold P6 billion worth of 182-day Treasury bills at 3.171 percent, down 24.9 bps from 3.42 percent last month.

As for the 364-day Treasury bills, P6 billion were awarded at 3.577 percent, down 8.9 bps from 3.666 percent during the previous auction.

In a statement, the Treasury said the T-bill rates were also below secondary market yields.

Tenders across the three tenors totaled P41.7 billion, over two times the offering amid “strong demand,” the Treasury said.

National Treasurer Rosalia V. de Leon told reporters after the auction that the lower rates came on the back of the Bangko Sentral ng Pilipinas’ (BSP) announcement of another round of reduction in banks’ reserve requirement ratio in November, which the market was already pricing in into their bids.

The 40-month low headline inflation of 0.9 percent year-on-year posted in September as well as expectations that the rate of increase in prices of basic commodities will further ease in October also pulled rates down, De Leon said.

The market also considered the possible rate cut of the US Federal Reserve this month given “very weak” manufacturing and jobs data, she added.

The continued easing of inflation is giving the Bangko Sentral ng Pilipinas more room for another interest rate cut.

“The big drop in inflation in the Philippines last month means that another rate cut before the end of the year is looking increasingly likely,” Capital Economics senior Asia economist Gareth Leather said in an Oct. 4 report.

So far this year, the central bank has cut its policy rate by a total of 75 basis points.