PHL T-bill rates fall to new record lows

The yields for short-term Treasury bills dropped to new record lows Tuesday — possibly the last auction of government debt papers this year. Investors were scrambling to invest in T-bills during Tuesday’s auction, National Treasurer Roberto Tan said in an interview with reporters. “There is so much funds in the system so they are trying to park it. Everybody is scrambling for earnings placements," Tan stressed. The interest rate the government will pay the benchmark 91-day T-bills dropped to a new all-time low of 0.775 percent, down 67.5 basis points from the previous record low of 1.48 percent on Nov. 15. The interest yield for 182-day debt papers fell by 33.3 basis points to a new low of 1.650 percent from 1.985 percent. And the rate for 364-day T-bills slid by 1.1 basis points to 2.383 percent from 2.394 percent. Tenders for the 91-, 182-, and 364-day T-bills totaled P20.39 billion or nearly three times the P7-billion issue size, Bureau of Treasury (BTr) records showed. Tan explained that the BTr will likely call off next week’s auction of the 10-year T-bonds, as the government will launch its debt consolidation program via a peso bond swap for new 10- and 25-year T-bonds. “We may cancel the auction of P8-billion 10-year T-bonds next week in lieu of the bond exchange. If the bond exchange progresses then the 10 year T-bonds auction will be cancelled," he added. Apart from a financial system awash with cash, Tan said the low inflation outlook and the Bangko Sentral’s decision to keep its policy rates at record lows also helped bring the interest rates on government borrowings to record lows. The central bank expects inflation this November to average between 2 percent and 2.9 percent, lower than the full-year target of 3.5 percent to 5.5 percent this year. Inflation eased to 4 percent in the first 10 months, from 4.1 percent a year earlier, after easing to an 11-month low of 2.8 percent in October. The country's debt stock went up by 10.8 percent to P4.691 trillion as of end-August from P4.233 trillion in the same period last year. Domestic debts surged 18.2 percent to P2.73 trillion, accounting for 58 percent of the total outstanding debt, and foreign obligations grew by 1.9 percent to P1.96 trillion or 42 percent of the debt stock. — TJD/VS, GMANews.TV