Yields on Treasury bills drop across the board

The yields on Treasury bills declined across the board in Monday’s auction, enabling the government to raise P15 billion as planned for the second week in a row.

This developed as analysts raised the possibility that central banks in Asia, including the Bangko Sentral ng Pilipinas (BSP), may be nearing the time to pause their policy rate hikes that will in turn lead to a lower cost of borrowings.

On Jan. 23, the auction committee led by the Bureau of the Treasury (BTr) noted that resulting rates from Monday’s auction were all lower than previous auction results and secondary market rates.

This was a reversal of last week’s auction results when, albeit there were full awards for the three tenors, this was attended by increases in interest rates for each.

On Jan. 23, the auction committee led by the BTr fully awarded its offers of 91-day and 182-day T-bills at P5 billion each, but raised only P3.65 billion from 364-day T-bills as lenders continued to ask for relatively high rates for the yearlong debt paper.

The interest rate for the benchmark three-month bills decreased by 3.9 basis points (bps) to an average of 4.211 percent from 4.912 percent previously.

Oversubscribed

Meanwhile, the rate for the six-month bills went down by 5.5 bps to 4.912 percent from 4.967 percent.

Also, the rate for the yearlong bills eased by 2 bps to 5.428 percent from 5.448 percent.

Secondary market rates

Compared to prevailing rates at the secondary market, Monday’s auction results were 10.1 bps lower for the 91-day bills (4.312 percent), 8.6 bps lower for the 182-day bills (4.998 percent), and 2.5 bps lower for the 364-day bills at 5.453 percent.

For the three tenors, investors made available a total of P60.013 billion, with each oversubscribed by at least more than thrice the offer.

The three-month bills were oversubscribed by more than four times with P22.36 billion tendered while the six-month bills were oversubscribed by almost four times with P19.08 billion tendered.

The yearlong bills were also oversubscribed by more than four times with P20.573 billion tendered.

Earlier this month, the World Bank said emerging and developing countries were facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates.

However, conditions in the Philippines are not as bleak as the overall picture, as the World Bank noted that the country was among those where the domestic economy had surpassed prepandemic levels.

The World Bank expects that, “after the strong rebound in 2022,” growth in the Philippines might moderate to 5.4 percent in 2023. INQ