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 PRESSROOM / NEWS
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 | Republic of the Philippines
DEPARTMENT OF FINANCE
Roxas Boulevard Corner Pablo Ocampo, Sr. Street
Manila 1004
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July 12, 2010
T-BILL RATES: JULY 12, 2010
BTr
FPPO-JEP
The Auction Committee today decided to accept all the subscriptions for the longer-term 364-day after its rate declined. On the other hand, it limited the sale of its 91- and 182-day as market players attempted to push up the rates higher than those prevailing in the secondary market as appetite for these two debts became relatively weak. However, the Auction Committee allowed the yields of these short-term debts to move up but only with an increase of not more than 4 basis points which were considered very minimal and insignificant. The Treasury sold a total of P6.45 billion worth of Treasury bills, lower than the programmed sale of P8.0 billion as market players showed lack of interest for the shorter-term T-bills as market demand shifted to securities with longer tenors just as what happened in today’s auction.
This somewhat cautious sentiment of the market players today was driven in large part by their renewed concerns over National Government’s budget deficit. Concerns on the deficit have always been a factor for interest rates. This came after the government made an announcement that it has made an upward revision on its budget deficit target for this year. Thus, concerns and speculations over NG’s finances and borrowings for the rest of the year resurfaced causing market players to once again adopt a wait-and-see stance as evident in today’s sale. The Development Budget Coordination Committee (DBCC) on its meeting last Friday, widened this year’s budget deficit target to P325 billion from the previous deficit target of P297 billion. The revised figure is equivalent to 3.9 percent of GDP. As of end-May, the government’s deficit already amounted to P162.1 billion, higher than the P123.2 budget deficit incurred in the same period last year. For May alone, deficit stood at P30.5 billion, more than double the P11.4 billion recorded in the same period last year. The government has yet to release deficit figure for June.
Although there was an increase on both the 91-day and the 182-day T-bill, yields barely moved up as the Auction Committee capped the increase to rates it deemed acceptable. The rate of the benchmark 91-day T-bill fetched 3.956 percent, up by 2.9 basis points from the 3.927 percent it got at the June 28 auction, with tenders reaching P3.54 billion. Of the P1.5 billion offer, the Auction Committee only sold P1.35 billion as the rate would have gone up by 3.5 basis points to 3.962 percent had it made a full award. Following the same trend, the 182-day T-bill got an average rate of 4.188 percent, 3.3 basis points up than the 4.155 percent this paper fetched at the previous auction. Of the P3.0 billion offer, the Auction Committee opted to sell only P1.6 billion worth of the papers. Had it chose to award the bids as planned; the yield would have gone up by 8.4 basis points to 4.239 percent. Tenders for this debt paper, reached P4.05 billion. On the other hand, the rate of the one-year debt declined by 2.9 basis points to 4.59 percent from the previous rate of 4.619 percent with tenders for this debt paper reaching P6.7 billion. The Auction Committee sold P3.5 billion worth of this debt instrument as planned.
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