T-bill rates dip across the board as demand soars

Treasury bill rates declined across the board at Monday's auction on the back of renewed investor appetite for government debt instruments, amid expectations of economic recovery this year. "The economy is sound. We would like to think that growth has recovered and that it's on its way up. The financial sector is looking up as well so it's a very stable situation," Finance Undersecretary Gil Beltran, who led the auction, told reporters. The average rate of the 91-day Treasury bill shed 1.4 basis points to 3.921 percent. Total bids reached P5.92 billion, almost three times the government's P2-billion offer. The average rate of the 182-day T-bill also slid by 7.8 basis points to 4.122 percent, with investors wanting to buy P13.84 billion worth of the debt. The government fully awarded its P3-billion offer. Meanwhile, the rate of the one year paper went down by 13 basis points to 4.49 percent. The government awarded P3.5 billion worth of the debt as total bids reached P13.29 billion. With its strong cash position, the Treasury bureau has enough to cover P65.6 billion worth of maturing debt this week. Of the total, P61.6 billion are Treasury bonds, while P4 billion are Treasury bills. The government borrows here and abroad by selling Treasury bills and bonds to plug its widening budget deficit — expected to reach a record P293 billion this year — given poor revenues. Last year, the budget gap swelled to P298.5 billion — above the expected P290 billion and higher than the P250-billion target due to anemic revenues and state failure to sell big-ticket assets. Last year's budget gap was more than four times the P68.1 billion deficit in 2008. The government expects the economy to grow by 2.6-3.6 percent this year, but analysts said it should raise the goal to 4 percent given the projected recovery of exports. — NPA,GMANews.TV