T-Bill Rates: March 8, 2010
March 8, 2010
Source : BTr
FPPO-JEP
Yields from the short-term Treasury bills once again fell across all tenors today on the back of strong investor appetite for government securities, mirroring the soft movement of interest rates in the secondary market. Market players bid aggressively today, swamping the sale and competing heavily for the debts. Taking advantage of the continued decline and the positive sentiment coming from the bond market, the Auction Committee awarded the debts as planned worth P8.5 billion.
At today’s auction, the easing inflation concerns largely contributed to the healthy appetite and strong investor confidence for the T-bills. As market players deemed T-bills to be on the safe side, funds flew back to short-term debts. This could possibly be bond market’s positive reaction to a better inflation data released last week. The National Statistics Office reported last Friday that country’s headline inflation rate in February eased to 4.2 percent from the 4.3 percent inflation rate recorded in January, falling within the central bank’s forecast. But BSP cautioned the domestic market as the core inflation slightly increased from 3.0 percent in January to 3.6 percent in February.
Aside from easing inflation, it was the liquidity that also kept the yields low today. The bond market was obviously flooded with so much cash given the huge volume of subscriptions submitted today. Note that some billions of pesos worth of government debts just recently matured and a substantial amount is scheduled to mature this week, all the more prompting the market players to submit lower bids today to replenish their supply. Moreover, the government was able to raise a total of $1.1 billion from its Samurai bond issuance last month thus coming in at today’s auction, market players were well aware that any high rates would be unacceptable. There is positive sentiment in the market due to the further deceleration of the domestic inflation and the huge cash floating in the market. As evident at today’s auction, at this time of uncertainties and lingering budget concerns, these factors bode well for the domestic bond market.
At today’s auction, the benchmark 91-day T-bill rate fell by 5.8 basis points to an average of 3.863 percent from 3.921 percent during the February 22 auction. The six-month T-bills, on the other hand, fetched 3.0 basis points lower to average at 4.092 percent from the 4.122 percent rate while the one-year paper was down by 6.2 basis points at 4.428 percent from 4.490 percent awarded in February 22 auction. As such, the Bureau of the Treasury successfully sold all P8.5 billion worth of the 91-, 182- and the 364-day T-bills as planned, with strong appetite observed across all tenors. Market players tendered a total of P7.55 billion for the bellwether debt or more than thrice the offer of which the Auction Committee accepted P2.0 billion as planned. For the six-month T-bill, total tenders reached P13.654 billion or more than four times the P3.0 billion offering which prompted the Auction Committee to make a full award. Similarly for the one-year debt, subscriptions were also more than four times the offering reaching P15.94 billion, of which the government accepted P3.5 billion as planned.