T-bill rates continue slide on lower govt appetite for borrowings

By Jun Vallecera

Reporters

SHORT-TERM Treasury bill rates continued to slide on Monday, falling lower still by 62.4 basis points in the case of the 92-day benchmark to 3.171 percent.           

Lower government appetite for borrowed funds and relatively high levels of liquidity in the system helped push the rates lower.

But National Treasurer Omar Cruz insisted the drop was more than a by-product of liquidity alone, saying this was on account of the upbeat mood of the local markets.

“It’s more than that, the market is still counting on positive news,” he told reporters.

He meant the economic prospects of the country this year when personal consumption is seen trending up, exports performance intensifying, such that services and industry output should also lift the gross domestic product (GDP) to growth ranging from 5.7 percent to 6.5 percent.

Cruz intended to sell no more than P4 billion worth of T-bills but ended up selling P5.6 billion as the auction drew bids nearly eight times more than what was available totaling P30.51 billion.

Cruz actually wanted to sell no more than P500 million in three-month T-bills, but accepted P200 million worth of bids to take advantage of the low rates the banks offered.

He also sold P600 million more in six-month IOUs and P800 million more in one-year papers when he planned to sell only P1.5 billion for the former and just P2 billion for the latter.

The rate for six-month T-bills dropped by 65.2 basis points to 3.665 percent and that of one-year T-bills by another 28.6 basis points to 4.218 percent.

The Bangko Sentral ng Pilipinas said it was closely monitoring the sale of government IOUs and was on a special watch for peso liquidity levels to ensure this did not translate into unwarranted inflationary pressure in the next few months.

The banks apparently turned a corner in November last year when bank lending, in single-digit growth levels most of the time, hit double-digit, with commercial bank lending averaging 11.1 percent for the first time since 1997.

But officials remained cautious and want more evidence of sustained lending growth going forward.

Cruz sold P2.1 billion worth of 182-day T-bills instead of only P1.5 billion as planned, as its bid rate fell 65.2 basis points to P3.665 percent.                

He also sold P2.8 billion rather than only P2 billion in one-year T-bills to take advantage of the rate that fell in this case by 28.6 basis points to 4.218 percent.          

http://www.businessmirror.com.ph/01232007/nation03.html