Liquidity boost buoys interest in Treasury bills

MANILA, Philippines - Yields of treasury bills rose on Monday after investors flocked the auction for government securities. The 182-day treasury bill climbed 5.1 basis points to 6.700 percent while the 364-day debt paper hiked 21.5 basis points to 7.111 percent. “We accepted because it is reflective of market conditions," National Treasurer Roberto B. Tan told reporters after the auction. Tenders for the P5-billion debt paper offering reached P11.725 billion as offers for the six-month treasury bills stood at P6.515 billion while bids for the one-year debt notes reached P5.21 billion. Tan said monetary authorities' move to cut the regular reserve requirement of banks by two percentage points to 19 percent allowed more funds to flow into the domestic financial system. Financial analysts earlier said the November 14 move of the central bank to cut reserve requirements provided a P60-billion boost to the country's liquidity. The Philippines borrows domestically through the issuance of treasury bills and bonds, which are practically risk-free instruments as they are guaranteed by the government. The administration is expected to borrow more in the domestic front as overseas debt markets are expected to remain tight amid the global financial crisis and the worldwide economic meltdown. Borrowings would help the country in partially addressing the anticipated fiscal shortfall of P75 billion this year and P102 billion in 2009. The government still maintains hopes of balancing the budget by 2010 but Finance Secretary Margarito B. Teves has earlier said the challenging economic times have made it "more difficult" to achieve fiscal balance in less than two years. - GMANews.TV