TREASURY BILL RATES INCH UP

Rates of the 91- and 182-day treasury bills inched up on Monday as investors awaited the Bangko Sentral ng Pilipinas’ decision on monetary policy amid the Covid-19-induced recession.

The Bureau of the Treasury sold all P20 billion in short-dated T-bills and offered another P5 billion of the 364-day debt paper through its tap facility window.

The average rate fetched by the P5 billion in benchmark 91-day treasury bills rose to 1.118 percent from 1.113 percent last week.

The P5 billion in 182-day awarded by the Treasury also had a higher rate of 1.388 percent from 1.386 percent previously.

The annual rate for the P10 billion in 364-day barely bucked the trend and settled at 1.745 percent, slightly down from 1.746 percent.

In a statement, the Treasury nonetheless noted that the yields were “all lower than the secondary market benchmark rates.”

National Treasurer Rosalia V. de Leon said T-bill rates were “plateauing as the Monetary Board is seen to leave rates unchanged” during Thursday’s meeting.

But de Leon noted that the BSP “still has room to lower policy rates.”

In an economic bulletin last Saturday, Department of Finance Undersecretary and chief economist Gil S. Beltran said that “given the continuing manageable inflation rate, economic authorities will be able to maintain interest rates at low rates.”

Headline inflation averaged 2.5 percent as of end-july, within the government’s 2 to 4 percent target range.

“The 364-day T-bill rate dropped to an average rate of 1.76 percent in July and 1.79 percent in the first auction in August. This will ease the burden on businesses adversely affected by the ongoing pandemic,” Beltran said.

Tenders across the three T-bill tenors totaled P63.3 billion, making the auction 3.2 times oversubscribed.

De Leon attributed the strong demand to maturing IOUS worth P118 billion, for which investors needed a reinvestment outlet.