Philippines: T-bill rates drop as inflation cools

MANILA, Philippines — The government yesterday borrowed another P15 billion from the domestic market through the sale of Treasury bills.

The T-bill auction fetched P77.675 billion in total tenders, oversubscribing the offer by more than five times.

National Treasurer Rosalia de Leon said rates across all tenors plunged, reflecting the inflation downtrend for four consecutive months now.

Yield for the 91-day T-bills dropped by 9.4 basis points to 0.875 percent, while the 182-day papers dipped by 2.4 bps to 1.097 percent. The 364-day securities slipped by 5.3 bps to 1.415 percent.

Investors are seen to favor the purchase of debt papers with short maturities to prepare for the impact of the ongoing taper policy and looming rate hike in the United States.

“Rates declined with inflation slowing and heavy bias on short tenors, as The Fed readies to start its rate liftoff,” De Leon said in a text message to reporters.

She said the government has prepared for any consequences the country may face from the US Federal Reserve’s taper move to withdraw monetary support. The Fed is poised to raise benchmark rates at least thrice within the year to prevent inflation from spiraling.

Although De Leon warned that borrowing costs overseas may go up, she said the government could shift the weight of its financing program to domestic creditors and multilateral lenders. Also, she said the Bangko Sentral ng Pilipinas would retain interest rates at record lows to support consumers and firms in their recovery.

“Unwind of easy monetary policies has been anticipated, more so now in US with high inflation,” De Leon said.