As more rate cuts expected, T-bill rates decline across the board

The Bureau of the Treasury sold all P20 billion in T-bills it offered on Monday (Feb. 10) as rates fell across the board in apparent anticipation of more rate cuts.

The Treasury awarded P6 billion in the benchmark 91-day debt paper at an average of 3.115 percent, down from 3.187 percent last week.

It also sold P6 billion in 182-day IOUs at 3.461 percent, down from 3.523 percent previously.

On 364-day treasury bills, P8 billion were sold at annual rate of 3.908 percent, down from 3.964 percent.

Tenders across the three tenors totalled P56.3 billion, making the auction almost three times oversubscribed.

Deputy Treasurer Erwin D. Sta. Ana told reporters that the T-bill rates declined following last week’s interest rate cut and Governor Benjamin E. Diokno’s pronouncement that the Bangko Sentral ng Pilipinas (BSP) may further lower key rates by midyear.

Also, “it is reported that the inflation outlook is quite manageable, hence the reduction in the rates,” Sta. Ana added.

Sta. Ana said the Treasury may again offer a “jumbo”-sized domestic bond issuance in the second half to raise funds for this year’s programmed P671.2-billion budget deficit as government spending at present was “quite elevated.”

While the Treasury will also consider the amount of revenues the bureaus of Customs (BOC) and of Internal Revenue (BIR) can collect, Sta. Ana said “the optimal timing for a new jumbo will have to be third or fourth quarter.”

The Treasury on Tuesday (Feb. 11) will settle the record P310.8 billion in three-year retail trade bond it sold during the last two weeks.

On a planned global sale of dollar-denominated bonds, Sta. Ana said the Treasury was “still monitoring the market” and discussing with the Department of Finance the timing for the issuance.

“Everything’s in place so it’s really on the timing of the transaction,” said Sta. Ana. “Especially also we’ll check our cash buffer, that’s also a consideration,” he added.

Edited by TSB