Treasury bill (T-bill) rates retreated across the board on Monday by as much as 14 basis points in a market, which has effectively starved itself of no-risk government securities the past few auctions by offering the Bureau of the Treasury (BTr) unacceptable bid rates that forced the auction committee to throw some or all of them away.
But it was a different story on Monday when the committee allowed the 91-day benchmark, for example, to move down 14.4 basis points to only 1.397 percent, from 1.541 percent a month earlier.
The retreat, the BTr said, was a function of the liquid state of financial institutions and their relative lack of tools or markets with which to park their funds with as little risk to themselves and their shareholders.
The interest rate for the 182-day T-bills averaged 1.699 percent, down by 5.9 basis points from the previous rate of 1.758 percent in February.
The interest rates for the 364-day T-bills, on the other hand, settled at 1.948 percent, or almost the same as the interest rates a month ago, which settled at 1.947 percent.
As a result of the acceptable rates offered on all three tenors of T-bills, the government made a full award on the P20-billion offering.
National Treasurer Roberto B. Tan said the lower rates quoted by investors on the government securities was due to higher demand on the short-term notes following the government’s rejection of all bids for T-bills offered at auction in January.
“We rejected all the bids in January and, perhaps, the market is also looking for supply,” Tan said.
Tan added that the lower bid rates now may also be attributed to the dovish statements of US Federal Reserve (the Fed) Chairman Janet Yellen who hinted at a recent congressional hearing that an interest-rate hike was not forthcoming in the near future.
There is an ongoing debate as to the timing of the anticipated interest-rate hike by the US Fed, with some looking at an early adjustment as early as June, while others argue for a much later date.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr., for example, has said while some forecast an interest- rate hike by the US Fed in June this year, there is reason to suspect regulators at the world’s largest economy to do that closer to year end.
Tan said Monday’s auction was oversubscribed, with total bids tendered amounting to P28.289 billion for the P8-billion offering for 91-day T-bills; total bids tendered amounted to P19.85 billion for the P6-billion offering for 182-day T-bills; and total bids tendered amounted to P12.75 billion for the P6-billion offering for 364-day T-bills.