T-bill rates further drop

The Ayuntamiento de Manila which houses the Bureau of the Treasury (From the Facebook account of the bureau)

MANILA, Philippines—Easing inflation calmed the debt market further dropping T-bill rates across the board on Monday (Jan. 10) and allowing the Bureau of the Treasury to raise P15 billion from short-dated IOUs.

The Treasury fully awarded P5 billion each in the benchmark 91, 182 and 364-day T-bills it offered.

Three-month debt paper fetched an average interest rate of 0.969 percent, down from 1.075 percent last week.

The Treasury awarded six-month securities at 1.121 percent, down from 1.269 percent previously.

One-year treasury bills were issued at an annual rate of 1.468 percent, down from 1.6 percent.

Tenders totaled P73.6 billion across the three tenors, making the auction almost five times oversubscribed.

National Treasurer Rosalia de Leon said the Treasury made a full award owing to the high bid-to-cover ratio, plus lower rates offered by government securities eligible dealers (GSEDs) on the back of a decline in inflation to a range within the target of 3.6 percent year-on-year in December 2021.

The market also had “bias towards short-term tenors” like those of T-bills “given rising COVID-19 cases” locally, which was considered as a risk, plus expectations that the US Federal Reserve will hike interest rates in an “imminent” and “aggressive” manner, De Leon said.

It also helped that GSEDs were looking to park funds as P25 billion in government securities will mature this week, boosting liquidity and, in turn, demand for the T-bills offering, she added.

TSB