The yield of the Treasury bills reached another all-time low across all tenors during Monday’s auction at the Bureau of the Treasury as the government decided to award more than its offer.
In total, the auction committee raised P12.6 billion, higher than the government’s original offer of P9 billion.
The rates for all tenors were an all-time low since the Treasury started auctioning off debt papers in 1987. This was also the first time that all the T-bills rates went below the 1-percent mark.
The rate of 91-day T-bills, the benchmark of banks when pricing their loans, reached 0.438 percent or lower by 54.1 basis points from the previous auction rate of 0.979 percent.
At the secondary market, the rate is at 0.85 percent.
Tenders reached P12.51 billion, or more than six times oversubscribed from the government’s offer of P2 billion. The government made an award of P2.8 billion or P800 million more than the offer.
National Treasurer Roberto Tan attributed the higher tenders to the market’s “deep liquidity” as a result of the country’s good economic fundamentals.
“Inflation is expected to be low and manageable and the market anticipates a neutral stance on the BSP [Bangko Sentral ng Pilipinas] on the policy rate,” Tan said after the auction.
In July the country’s inflation rate was at 4.6 percent, or the same as June’s rate, while BSP’s overnight borrowing rate stands at 4.5 percent and lending rate at 6.5 percent.
The BSP decided to keep its rates steady during its previous policy meetings, but increased the reserve requirement of the banks.
“We know where the liquidity is coming from. It’s still from the foreign investors,” Tan said.
Earlier, Tan said investors were shifting their money from the equities market to government securities as a result of the volatile market overseas.
Meanwhile, the rate of the 182-day T-bills slid by 31.8 basis points to 0.682 percent from the previous yield of 1 percent. Tenders reached P14.55 billion and the government awarded P4.2 billion, higher than the P3 billion programmed for the period. At the secondary market, the same paper is being traded at 0.95 percent.
The 364-day paper fetched an average rate of 0.944 percent, down by 55.6 basis points from the previous record low of 1.5 percent. The paper is trading at the secondary market at 1.35 percent. Tenders reached P15.65 billion and the auction committee also increased its award to P5.6 billion from its original offer of P4 billion.
Meanwhile, Tan said the government is considering borrowing from the domestic market instead of selling debt to the overseas market.
He said the Aquino administration has the option of selling retail Treasury bonds or the over the counter facility, which offers long-term debt paper.
