Benchmark interest rates drop anew
At A Glance
- The Bureau of the Treasury raised P15 billion through the auction of Treasury bills (T-bills), with total bids reaching P50.510 billion.
- The average interest rate for the three-month T-bills decreased from 5.744 percent to 5.710 percent.
- The government also fully awarded P5 billion for the 182-day IOUs, with total bids reaching P15.770 billion.
- The average interest rate for the six-month T-bills dropped from 5.916 percent to 5.880 percent.
- The Treasury raised P5 billion through the sale of 364-day debt papers, meeting the target, and total tenders reached P19.340 billion.
- The average yield for the one-year securities decreased from 6.033 percent to 5.982 percent.
- Prior to the auction, the secondary market rates were 5.775 percent for the 91-day T-bills, 5.919 percent for the 182-day T-bills, and 6.065 percent for the 364-day T-bills.
The Bureau of the Treasury was successful in selling all its short-term debt papers, taking advantage of declining interest rates.
During an auction on Monday, March 25, the national government raised P15 billion as planned via the treasury bills (T-bills) it auctioned off as total bids reached P50.51 billion, more than three times oversubscribed than the total offering.
The Treasury accomplished its goal of raising P5 billion by selling 91-day T-bills, as the total bids soared to P15.400 billion.
The average interest rate for the three-month papers dropped from 5.744 percent in the previous week to 5.710 percent.
Furthermore, the national government successfully allocated the full amount of P5 billion for the 182-day IOUs, with total bids reaching P15.77 billion.
The interest rate for the six-month T-bills also decreased from 5.916 percent in the previous week to 5.880 percent.
Lastly, the Treasury achieved its target by raising P5 billion through the sale of 364-day debt papers. The total tenders received for the one-year tenor amounted to P19.340 billion.
Moreover, the average yield for the one-year securities decreased from 6.033 percent in the previous week to 5.982 percent.
Before Monday's auction, the PHP Bloomberg Valuation Reference Rates showed that the 91-day, 182-day, and 364-day T-bills were higher anew at 5.775 percent, 5.919 percent, and 6.065 percent, respectively, in the secondary market.
Yields for T-bills fell after some dovish signals from local monetary authorities since last week on possible local policy rate cuts, said Michael L. Ricafort, Rizal Commercial Banking Corp. chief economist.
Currently, the central bank’s overnight policy rate stands at 6.50 percent, while the overnight rate average auction rate is at 6.501 percent.
Ricafort added that the Fed’s reiteration at the March 20 rate-setting meeting on the possibility of 3 Fed rate cuts for 2024 led to the easing of yields as well as the “consistent view since the Fed’s pivot towards Fed rate cuts since December 13, 2023, as supported and justified by easing headline inflation towards central bank targets.”
The Treasury aims to raise as much as P180 billion in March from the combined sale of T-bills and Treasury bonds. Of this amount, P60 billion will come from the sale of T-bills.
Based on state budget documents, the national government aims to borrow a total of P2.46 trillion from creditors at home and abroad in 2024 to help bridge its budget deficit which is projected to hit P1.4 trillion this year.