T-bill rates ease for the second week

MANILA, Philippines — Interest rates sought by the local market fell for the second straight week, allowing the government to fully raise its target amount of short-term debt during Monday’s sale of Treasury bills (T-bills).

Auction results showed that the Bureau of the Treasury (BTr) was able to borrow P15 billion via T-bills, as planned.

The offer attracted total tenders amounting to P47.25 billion, over three times bigger than the original offer size. The strong appetite from lenders, in turn, helped the government lock in cheaper rates.

But apart from the robust demand, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said yields for the T-bills fell as the financial system remains awash in cash as P700 billion worth of Retail Treasury Bonds (RTBs) matured early this month.

With so much liquidity looking for viable investments right now, Ricafort said T-bill rates managed to buck the higher US Treasury yields week-on-week.

READ: After 11 straight auctions, T-bill rates decline

“The large maturities of RTBs increased peso liquidity in the financial system and some of which would be reinvested in government securities (GS) in the market, thereby leading to mostly slightly lower GS yields week-on-week,” he said in a commentary sent to journalists.

New market leads

According to the BTr, rates for 91-day T-bills averaged 5.744 percent, lower than the 5.772 percent seen in the last auction.

Meanwhile, creditors sought an average rate of 5.916 percent for 182-day debt securities, cheaper than the 5.966 percent recorded in the previous week.

The average yield for 364-day T-bills fell to 6.033 percent, from 6.087 percent in the preceding auction.

Moving forward, Ricafort said the monetary policy decision of the US Federal Reserve on March 20 would serve as a “source of new market leads.”

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024.

READ: Significant increase in PH gov’t borrowings seen in 2024 — S&P

Of that amount, P672.1 billion will be raised via short-dated T-bills while P1.8 trillion will come from weekly auctions of Treasury bonds.

Those borrowings are needed to help plug a projected budget hole of P1.39 trillion this year, equivalent to 5.1 percent of gross domestic product.

Based on latest government forecasts, it is only in 2027 that the budget deficit, as a share of the economy, will return to prepandemic level at 3.2 percent.

Finance Secretary Ralph Recto said the government would remain “prudent” in its debt management by continuing to adopt a 75:25 borrowing mix in favor of domestic sources.