INVESTORS’ asking yields for short-term Treasury bills (T-bills) sharply plunged to below market and policy benchmark rates, pinned by an analyst on declining global oil prices, easing inflation and overwhelming demand for the government securities.
The Bureau of the Treasury’s (BTr) auction last Tuesday saw favorable rates for the national government to raise its full programmed amount of P10 billion from the sale of 3-tenor T-bills.
With the results, the Treasury raised P3 billion from 91-day T-bills, another P3 billion in 182-day tenor and P4 billion from 364-day government securities.
Surprisingly, investors’ asking yields across all the debt papers were way below the prevailing secondary market benchmark level and even that of the Bangko Sentral ng Pilipinas’ (BSP) current interest policy rate of 6.5 percent.
For the 91-day T-bills, investors’ average yield stood at 4.753 percent, versus the previous tender’s 6.123 percent. The comparable PHP BVAL yield for the debt paper with the same maturity was at 5.75 percent.
Bids for the 91-day T-bills ranged from 4.72 percent to 4.78 percent.
Meanwhile, tenders for the 182-day T-bills had rates ranging from 5.11 percent to 5.27 percent. It averaged 5.181 percent, versus last week’s 6.513 percent.
The 364-day T-bills fetched an average rate of 5.727 percent with a bid range of 5.59 percent to 5.75 percent. T-bills’ yields averaged 6.56 percent in the Treasury’s previous tender last November 13.
The Treasury’s auction on Tuesday was oversubscribed by 7.2 times with total offer reaching P72.215 billion.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort attributed the “sharp” decline in T-bills yields to the strengthening of the peso in nearly four months and lower global crude oil prices. He pointed out the latter have gone down to 4-month lows.
Ricafort also noted that the market’s expectation of a Federal Reserve rate cut in 2024 contributed to the easing trend in local and US bond yields.
“Treasury bill auction yields are again unusually lower against the comparable short-term PHP BVAL yields, as partly supported by the continued gains in the US, global and local financial markets since the start of November 2023,” the RCBC executive said.
“Sharply lower T-bill auction yields would effectively reduce the borrowing costs of the government and other private sector borrowers,” Ricafort added.
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