91-day T-bill rate eases amid partial auction award

The national government raised P9.7 billion out of the P15-billion target from its offering of short-term securities this week as the auction committee moved to lower the benchmark rate even as lenders mostly sought higher yields.

At the auction held on March 6, the committee awarded only P2.455 billion worth of 91-day Treasury bills (T-bills) out of the P5-billion offering, allowing the average yield to decrease by 27.8 basis points (bps) to 4.586 percent from 4.864 percent in the previous auction held last week.

The committee also awarded only P2.25 billion out of P5 billion of the offered 182-day T-bills. However, the yield was 20.1 bps higher at 5.378 percent compared with the previous auction’s 5.177 percent.

The P5-billion offer of 364-day T-bills was awarded fully, with the average rate rising 13 bps to 5.707 percent from 5.577 percent.

Secondary market

The resulting average rate for the benchmark T-bills was 3.1 bps lower than the prevailing rate of 4.617 percent for corresponding done deals at the secondary market.

Meanwhile, the new average for the six-month bills was 20.2 bps higher while that for the yearlong bills was 9.8 bps higher. Secondary market rates were pegged at 5.176 percent and 5.609 percent, respectively.

All tenors were oversubscribed, with lenders—which are mostly banking groups—making available P5.172 billion for the 91-day T-bills; P6.8 billion for the 182-day T-bills; and P8.157 billion for the 364-day T-bills.

Banks have leeway

According to Fitch Ratings, a significant impact on banks of cumulative policy rate hikes of the Bangko Sentral ng Pilipinas was “unlikely.”

Fitch Ratings said that with the policy rate having risen since May 2022 by a total of 4 percentage points to 6 percent currently, banks’ asset quality risks are rising due to high inflation and rising interest rates.

“However, [we] expect the sector non-performing loan ratio to remain steady at around 3.5 percent by end-2023 (from 3.3 percent in 2022), as risks are largely offset by the adequate financial buffers of large corporate borrowers and a supportive economy,” the credit watchdog said.

“All Fitch-rated private banks have headroom in their asset quality scores relative to our forecasts on loan performance,” the group said.

“The state-owned banks—Development Bank of the Philippines and Land Bank of the Philippines—have less headroom, but credit risks in their loan portfolios are partly offset by their larger investment securities books, which are dominated by lower-risk government securities,” it added. INQ