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T-bill rates continue to fall |
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By Rocel C. Felix
The Philippine Star 05/17/2005 Treasury bill (T-bill) rates continued to slide across the board yesterday with the average rate on the benchmark 91-day T-bill falling to 6.028 percent as banks remained liquid and while the market anticipates an improved government fiscal position. "Liquidity is at an all-time high and cash is coming out of our ears and there was pressure to bring down interest rates," National Treasurer Omar Cruz said yesterday. At yesterday’s auction, rates for the bellwether 91-day T-bills eased further to 6.028 percent, or 14.6 basis points lower than the 6.174 percent posted in the previous week. The three-month debt instrument was oversubscribed as bids reached P11.145 billion compared with the government’s debt offering of only P2 billion. On the other hand, rates for the 182-day T-bills tumbled by 25.3 basis points to settle at 7.096 percent from 7.349 percent. Demand for the six-month T-bill was also high, with tenders reaching P9.255 billion. Yield for the 364-day T-bill was also down by 17.2 basis points to 8.14 percent from 8.31 percent in the previous week. The auction committee accepted P2 billion each for all tenders and rejected the bulk of the tenders. "There is a basis for lower interest rates because of positive developments along with an expected improved fiscal front," said Cruz, adding that "this should further stabilize interest rates in the near term." This week, the Department of Finance (DOF) will release the National Government fiscal position for April. The first quarter deficit was at a level of P63.5 billion. "It will definitely be a positive picture," Cruz stressed. Treasury bill rates have been dropping across all maturities for the last four auctions. The government attributed these to much-awaited recent passage of the value added tax (VAT) bill which is seen to boost government revenues. The VAT bill is the key-revenue raising measure being pushed by the Arroyo administration to ease its fiscal problems. In order to meet its deficit target, the government needs to raise as much as P128 billion in incremental tax revenues instead of just P80 billion that was expected from its original tax reform program. |
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