MANILA – The Bureau of the Treasury (BTr) on Monday fully awarded bids for Treasury bills (T-bills).
The auction for the 92-, 182-, and 364-day T-bills fetched average rates of 5.380 percent, 5.480 percent, and 5.583 percent, respectively – all lower than the previous auction and prevailing secondary market rates.
Last week, the average rates of the 91-, 182-, and 364-day T-bills settled at 5.743 percent, 5.940 percent, and 5.973 percent.
In a Viber message, Rizal Commercial Banking Corporation chief economist Michael Ricafort said the lower auction yield was largely triggered by the cut in banks' reserve requirement ratio (RRR).
Last week, the Bangko Sentral ng Pilipinas announced that they will reduce the RRR of banks effective Oct. 25.
Ricafort said the RRR cut would effectively allow banks to increase loans by about PHP400 billion, increasing banks’ lending activities at a lower intermediation costs.
"Some of the additional peso liquidity would also find their way buying more government securities and other fixed income securities including money market instruments such as Treasury bills, leading to lower auction yields as some investors lock in interest rates before market yields go down further amid future Fed and BSP policy rates for the coming months amid easing inflation trend and to avert the risk of recession," Ricafort said.
The auction was 4.7 times oversubscribed, with total bids reaching PHP93.3 billion, which is the highest volume of tenders for a T-bill auction this year.
With its full award, the BTr raised the full program of PHP20 billion for the auction. (PNA)
