Treasury bill (T-bills) rates fell across the board on Monday, led by 91-day T-bills whose rate improved by 5.7 basis points to 2.148 percent, from 2.205 percent two weeks earlier, the Bureau of the Treasury (BTr) said.
This development has beneficial impact on borrowers whose true cost of funds, measured as the real interest rate, narrowed or improved by the same measure, given latest inflation data averaging 3.4 percent in April.
Treasury officials said tenders aggregated P55.116 billion indicative of an economy still very much liquid and confident that price pressures, while remaining elevated in recent months, should not break out beyond target range for the year and allow the $292-billion economy to expand possibly by 7 percent in terms of the GDP.
Market players “don’t really think inflation is picking [up]. Inflation would remain very manageable. Hence, the strong appetite and very reasonable rates in the auction,” National Treasurer Rosalia V. de Leon said of the mood prevalent among banks and financial institutions, collectively known as government securities eligible dealers (GSEDs).
The tenders from investors amounted to figures just under four times larger than the government offered for 91-day T-bills alone, aggregating P23.946 billion.
The BTr accepted the biggest chunk of P6 billion for the 91-day T-bill that was tendered at P23.946 billion. Rates inched down by 0.057 percent, from 2.205 percent to 2.148 percent.
“There’s a lot of offers made on the 91-day bill that shows preference on the shorter-end IOUs,” de Leon said.
The rate for 182-day T-bills also improved by 10.8 basis points to 2.494 percent on Monday, from 2.602 percent. The six-month IOUs were similarly swamped by tenders aggregating P13.945 billion, although the Treasury was only prepared to sell P5 billion. De Leon would later be forced to reject nearly P9 billion worth of bids for the tenor.
As for 364-day T-bills, the rate improved 13.1 basis points to 2.835 percent, from 2.966 percent, when the tenor last sold two weeks earlier and the entire batch of P4 billion disposed quickly.
Data show the three-month Philippine Dealing System Treasury reference rate in the negative territory at minus 1.2769 and compares against the historical average of 0.7479 percent.
“We are very pleased with the results and offers by the GSEDs. There is a very strong appetite on the short end of the curve given the liquidity,” de Leon said.