T-bills rates continue to fall

The Bureau of the Treasury on Monday raised P24 billion or a fifth more than its P20-billion bills offering as rates continued to decline across the board.

The Treasury sold P5 billion in benchmark 91-day IOUs at 2.058 percent, down from 2.09 percent last week.

It also awarded P5 billion in 182-day debt paper at 2.114 percent, down from 2.193 percent during the previous auction.

As for the 364-day bills, the Treasury sold P14 billion, instead of only P10 billion, at 2.508 percent, down from 2.653 percent previously.

Tenders across all the three tenors totaled P94.3 billion, making the auction more than four times oversubscribed.

National Treasurer Rosalia V. de Leon said investor sentiment was “supported by ample liquidity and possible Bangko Sentral ng Pilipinas (BSP) action to trim RRR (reserve requirement ratio) again,” referring to banks’ reserve requirement ratio. Reducing the RRR will free up cash that banks can lend to finance economic activities.

Amid the COVID-19 pandemic, the BSP had reduced bank reserves by 200 basis points (bps), freeing an estimated P220 billion in liquidity into the financial system.

Due to strong demand for one-year bills, the Treasury also opened its tap facility window to sell another P10 billion to the 11 government securities eligible dealers.

This year’s expected weak revenue take has forced the government to borrow more and in the process will jack up the debt stock to a record-high P9.59 trillion by year’s end.

The Cabinet-level Development Budget Coordination Committee’s said the end-2020 outstanding debt level would be equivalent to 49.8 percent of gross domestic product.

The national government’s gross borrowings already rose 5.3 percent year-on-year to P656.7 billion in the first quarter as both locally sourced and foreign debt increased.

Treasury data showed that gross domestic borrowings from January to March amounted to P510 billion, up from P490.6 billion a year ago. INQ