T-bill rates inched up across the board ahead of BSP policy rate decision

National Treasurer Rosalia de Leon / INQUIRER FILE PHOTO

MANILA, Philippines — The government raised P20 billion from treasury bills on Monday even as rates inched up across-the-board while investors awaited the central bank decision on the policy rate.

The Bureau of the Treasury sold P5 billion of the benchmark 91-day T-bills at an average rate of 2.068 percent, up from 2.035 percent last week.

It also awarded P5 billion in 182-day IOUs at 2.159 percent, up from 2.101 percent previously.

The P10 billion in 364-day debt paper fetched an annual rate of 2.408 percent, up from 2.35 percent during the previous auction.

Tenders across the three tenors amounted P68.9 billion, making the auction more than three times oversubscribed the P20-billion total offering.

National Treasurer Rosalia V. de Leon said that while the rates during Monday’s auction were slightly higher than last week’s, these all remained lower than secondary market benchmark levels.

“Rates were aligned with inflation as investors looked for signals from the Bangko Sentral ng Pilipinas (BSP),” de Leon said.
At end-May, headline inflation averaged 2.5 percent, within the government’s 2-4 percent target range.

The Monetary Board, the BSP’s highest policy-making body, will decide on the monetary policy stance when it meets on Thursday, June 25.

The BSP was expected to keep the policy rate at 2.75 percent as Governor Benjamin E. Diokno had said prevailing interest rates remain appropriate for now.

So far this year, the BSP already cut key rates by a cumulative 125 basis points, with a chunk of the reduction made at the height of the COVID-19 lockdown when 75 percent of economic activities were put to a halt to strictly enforce social distancing.About P1.1 trillion in output were estimated to have been shed from gross domestic product (GDP) during what was said to be one of the most stringent COVID-19 lockdowns in the region.

JPV