MANILA -- The rates of Philippine Treasury bills (T-bills) fell across-the-board Monday, which National Treasurer Rosalia De Leon traced to “healthy demand” and “strong liquidity” of the system.
Rate of the bellwether 91-day paper dropped by 4.1 basis points to 3.203 percent from last week’s 3.244 percent.
Average rate of the six-month paper declined to 4.064 percent from the previous week’s 4.117 percent and 363-day paper to 4.869 percent from 4.892 percent.
The auction committee made full award for all tenors after the shortest tenor, which was offered for PHP4 billion, received bids that are more than three times at PHP12.857 billion.
Tenders for the 182-day paper reached PHP17.928 billion, way higher than the PHP5 billion offering; and bids for the one-year paper amounted to PHP12.358 billion, more than twice the PHP6 billon offering.
De Leon told reporters after the auction that banks are bullish because of lesser uncertainties given the recent hike in the Bangko Sentral ng Pilipinas’ (BSP) key rates, which she said “calmed the market”, as well as the large volume of maturing securities for the week amounting to Php 91 billion.
She explained that with the recent 50 basis points increase in the BSP rates market domestic interest rates are expected to be on a downward trajectory, especially with monetary officials’ statements that domestic inflation this year is expected to peak by August or September.
“And we see that appetite continues to be on the short end of the curve given the strong bid to cover volume in today’s auction,” she said.
Meanwhile, De Leon said they continue to monitor market developments such as the trade tensions overseas and the next Federal Reserve rate increase before they decide on the possible issuance of another US dollar-denominated bond in the last quarter of this year.
If this pushes through, it will be the second for the country this year after the USD2 billion, 10-year Republic of the Philippines (ROP) issuance last January.
“Right now we don’t have a firm time table in terms of when we are going to issue. We are just making the necessary preparations and watching markets,” she said, citing that discussions with banks that will serve as lead managers continue.
Tenor and volume to be offered are still being discussed as well, she said.
The National Treasurer said that aside from US-denominated bond they remain open for the issuance of the yen-denominated Samurai bond , the yuan-denominated Panda bond and even euro-denominated debt paper.
She said issuance of these securities depends not only on market situation but also on new investors.
Aside from the ROP issuance last January, the Philippine government also issued 1.46-billion worth three-year Panda bond last March and the multi-year 154.2 billion Samurai bond in early August.
Asked for the importance of foreign borrowing on the government’s massive infrastructure program, De Leon said commercial borrowings is meant to provide supply to the market and not just to gain funds while official development assistance (ODA) loans provide “very concessional financing.”
She said proceeds of the commercial borrowings are “really for financing our deficit, our amortization because we have maturities that we have to fund.”
She also stressed that the possible dollar-bond issuance later this year will be done to further increase the country’s foreign currency reserves and not merely to refinance old debt.
“We are building (our reserves), yes. Our cash flow is very strong because of the revenue collections, the performance of the revenue agencies,” she added. (PNA)
