The average rate of 35-day Treasury bills (T-bills) capped at a record-low on Tuesday as rates continued to plunge after monetary authorities further cut policy rates by 50-basis point last week.
The Bureau of the Treasury also fully awarded P15 billion in 35-day T-bills also on the back of strong demand for the short-term debt papers that attracted P62.5 billion total bids.
National Treasurer Rosalia V. De Leon told reporters that rates were still lower due to the rate cut by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP).
The 35-day T-bills fetched an average rate of 1.684 percent, plummeting by 41.7 basis points from 2.101 percent average rate from the previous auction.
Despite the auction being oversubscribed by more than four times as much as the P15-billion offering, De Leon said they did not upsize the volume of award for 35-day debt papers “because of the very short tenor.”
To recall, the Treasury revived the 35-day bill offering and once again started auctioning it off on March 31 to provide an outlet for investors and, at the same time, enable government to fund its short-term requirements. The suspension of BSP’ term deposit facility auction back then also prompted the Treasury to issue 35-day T-bills.
The third policy rate cut last Thursday slashed the interest rate on overnight reverse repurchase (RRP) facility by 50 basis points (bps) to 2.25 percent, effective Friday, June 26. The interest rates on the overnight deposit and lending facilities were reduced to 1.75 percent and 2.75 percent, respectively.
On Monday, the Treasury also raised an additional P10 billion in 364-day T-bills through the tap facility auction, which was opened to all 11 government securities eligible dealers-market makers.
The additional P10 billion raised by the Treasury on Monday added to the P26 billion in 91-day, 182-day and 364-day T-bills it sold earlier in the day.
For this week, the Treasury raised a total of P51 billion from selling debt papers.
For July, the Treasury programmed a P205-billion borrowing from the local debt market, up from the P170 billion programmed for June.