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91-day T-bill rate plunges to 5.92% |
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The Manila Bulletin 05/24/2005
The Bureau of Treasury raised the volume of T-bills it awarded for six-month and one-year maturities by P800 million ($14.7 million) each due to high tenders. The benchmark 91-day Treasury bill rate, used by banks to price their loans, fell to its lowest level since October 2003 at 5.920 percent at an auction yesterday due to high liquidity and optimism on the country’s fiscal outlook. The Treasury originally offered P2 billion each of 91-day, 182-day and 364-day T-bills. National Treasurer Omar Cruz said the downward trend in the average rate of the 91-day paper was partly due to slow bank loan demand. "It’s the liquidity," Cruz said. "Until the banks start lending out, liquidity will remain high." Growth in loans by commercial banks remain at single-digit levels. The expansion in the year through February of 5.8 percent was only slightly higher than the 4.0 percent rise the previous month. Slowing global demand for the country’s main electronics exports, weak agricultural output due to weather disturbances and rising costs due to a higher oil bill have discouraged manufacturers from expanding aggressively, keeping production at moderate levels, analysts said. Speculation about a possible credit rating upgrade for the Philippines also put downward pressure on rates following positive news on the country’s budget deficit and the passage of some crucial tax reform measures, money market dealers said. "There are very few negatives in the market," one dealer said. Standard & Poor’s said on Friday that if positive developments continue on the fiscal front, the next change in its ratings outlook for the Philippines "would be a positive and not a negative." Standard & Poor’s downgraded the country’s sovereign rating in January to three notches below investment grade with a stable outlook. Moody’s Investors Service cut its rating to four notches below investment grade in February citing a lack of progress in the country’s fiscal reform program. |
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