T-bill rates continue to fall

Treasury bill rates fell across the board for the second week in a row amid continuing strong demand and expectations that central banks both here and abroad are winding down their tightening cycle.

This downtrend raises the likelihood that rates on consumer loans, including those for houses and cars, will also eventually decline.

On Jan. 30, the auction committee led by the Bureau of the Treasury raised P15 billion as planned with full awards of P5 billion each for the 91-day, 182-day and 364-day Treasury bills.

The interest rate for the benchmark three-month bills decreased by 5.9 basis points (bps) to an average of 4.152 percent from 4.211 percent previously.

Also, the rate for the six-month bills went down by 3.7 bps to 4.875 percent from 4.912 percent.

Oversubscribed

Further, the rate for the yearlong bills eased by 7.4 bps to 5.354 percent from 5.428 percent.

In addition, this week’s auction results compared to prevailing rates at the secondary market were 22.4 bps lower for the 91-day bills (4.376 percent), 7.9 bps lower for the 182-day bills (4.954 percent), and 4.1 bps lower for the 364-day bills (5.395 percent).

National Treasurer Rosalia de Leon told reporters that the strong demand led to lower rates, enabling full awards across the board.

For the three tenors, investors made available a total of P61.85 billion, with each oversubscribed again by at least more than thrice the offer.

Lenders were ready to subscribe to P16.58 billion worth of 91-day bills and P17 billion worth of 182-day bills.

The 364-day bills were oversubscribed by more than five times the offer, with tenders totaling at P28.27 billion.

Smaller hikes

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said T-bill yields have been correcting lower amid recent signals that the Bangko Sentral ng Pilipinas (BSP) will cut its policy rate by the third quarter this year.

The BSP has also been hinting that there would be one or two more rate hikes at smaller increments that would bring the policy rate to a peak of 6 percent from 5.5 percent currently.

Ricafort said this was also influenced by similar expectations that the United States Federal Reserve would go for smaller rate hikes. INQ