Treasury bill rates drop amid strong investor demand

Strong demand from investors amid a liquid financial market and the country's sound economic fundamentals caused rates of Treasury bills (T-bills) to fall across the board, the country's National Treasurer announced Monday.

T-bills are short-term debt papers offered at a discount to banks in exchange for lending money to the government for 91-, 182- or 364-days. Banks earn by getting the face value of the paper upon maturity.

The 91-day debt paper were quoted at 0.666 percent down 23.4 basis points, after P19.21 billion worth of bids from highly liquid banks came in on Monday's auction.  

These were more than more than four times the government’s debt offering of only P4 billion.
 
The 182-day papers got 0.873 percent down 12.7 points, while 364-day bills eased by five basis points to 1.2 percent.

Bids for the six-month bills reached P20.81 billion, more than three times the P6 billion offered for sale; while the one-year government securities attracted P13.985 billion worth of bids compared with the P10 billion on offer.

The auction committee, however, stuck to its borrowing program and accepted just P4 billion (91-day bills), P6 billion (182-day) and P10 billion (364-day) worth of bids.

“This is better than what we expected.  We were expecting it to be oversubscribed by just two times but it it turned out to be three, five times.  Liquidity is just overflowing,” said National Treasurer Rosalia De Leon.  
 
She noted demand is mainly driven by domestic investors.

Meanwhile, De Leon said she hopes more small investors will take part in the government’s planned retail bond (RTB) offering slated in the third quarter this year.
 
The Bureau of Treasury earlier announced it would be selling P30 billion worth of 10-year RTBs part of its third quarter fund-raising program of P150 billion. – SOA/BM, GMA News