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T-bill rates decline

The rates of the Philippines Treasury bill (T-bills) declined across-the-board yesterday despite the strong demand.

National Treasurer Rosalia de Leon attributed this to investors’ preference for safe haven assets.

The average rate of the 91-day paper went down to 1.269 percent, the 182-day to 1.609 percent, and the 364-day to 1.926 percent.

These were at 1.336 percent for the three-month paper, 1.718 percent for the six-month paper, and 1.997 percent for the one-year T-bills.

“(We) see rates moderating as investors again flock to safe haven assets,” de Leon told journalists.

The auction committee upsized the award for the three and six-month debt instruments to P7 billion from the PHP5-billion offer for both tenors.

Tenders for the 91-day T-bill reached P22.357 billion while these amounted to P21.507 billion for the six-month paper.

The one-year T-bill was fully awarded at P10 billion after tenders amounted to P35.466 billion.

The Bureau of the Treasury (BTr) opened the tap facility to offer the 364-day paper for another P5 billion during the day.

The rates of government debt papers have been rising in recent weeks, which authorities point to investors’ concerns on the elevated domestic inflation rate.

Asked if this is not among the factors in this week’s T-bill auction anymore, de Leon said “as BSP (Bangko Sentral ng Pilipinas) (has) clarified, higher inflation is transitory, coming from supply-side constraints which non-monetary measures  will address.”

“Sufficient liquidity remains,” she added.

The rate of price increases rose for the fifth straight month last February to 4.7 percent after breaching the government’s 2-4 percent target band last January when it hit 4.2 percent.

Monetary authorities expect the elevated inflation rate to last until the third quarter of the year, with this year’s average inflation rate projected at 4.2 percent.

It is projected to decelerate and average at 2.8 percent next year.*PNA

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January 2022

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