T-bill rates drop on strong demand

Treasury-bills (T-bills) rates went down across the board during yesterday’s auction amid healthy demand from investors, prompting the Bureau of the Treasury (BTr) to fully award all securities.

Rates for 91-day T-bills averaged 3.3 percent, 13.7 basis points lower than the 3.437 percent recorded in the previous auction last week.

The P5 billion offering was almost thrice oversubscribed, with total tenders amounting to P13.8 billion.

The average rate for sixmonth debt papers declined by 17.9 basis points to 3.7 percent from 3.879 percent last week.

Total bids reached P13.574 billion, more than three times larger than the issue size of P4 billion.

Lastly, the 364-day T-bills were sold at an average rate of 4.198 percent, 9.9 basis points down from 4.297 percent the previous auction.

Demand for the securities was strong with bid applications reaching P10.535 billion compared to the P6 billion issue size.

According to National Treasurer Rosalia de Leon, securities yesterday were able to fetch lower rates due to ample liquidity in the financial system.

De Leon said the market is flush with liquidity following the Bangko Sentral ng Pilipinas’ move to further trim reserve requirements (RR) ratio of banks to 18 percent from 19 percent. She said there is also liquidity after the BTr settled P130 billion in maturities last May 23.

“That’s following the release of the RR (reserve requirement) cut and then of course, we also had the maturity of P130 billion, so combine them together and you see the liquidity flowing in the system,” De Leon said.

With this kind of market condition, the national treasurer expressed optimism the retail treasury bond (RTB) float of the Treasury would meet great participation from the general investing public.

The RTB offering has an initial amount of P30 billion and will take place from March 30 to June 9.

However, De Leon said the volume of accepted offers from investors during this tranche of RTB sale would probably be lower than the P255 billion raised during the last RTB issuance last November as revenue generating agencies are still performing well.

The national treasurer said proceeds of the sale would be used to finance the projected fiscal deficit for the year and compensate for the past rejections made by the BTr during the course of the year.

She said the BTr has tapped the Land Bank of the Philippines as the lead issue managers for this RTB offering. Joining Landbank as issue managers are the Development Bank of the Philippines, BDO Capital and Investment Corp., BPI Capital Corp., and SB Capital Investment Corp., among others.