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91-day T-bill rate falls to 5.452% |
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The Manila Bulletin 07/19/2005
Yields of the benchmark 91-day treasury bills fell sharply at an auction by the Bureau of Treasury yesterday on the peso’s recovery and ample liquidity in the financial system. The average 91-day T-bill yield fell 72.1 basis points to 5.452 percent from last week, the Bureau of Treasury said. The 182-day T-bill yield averaged 7.431 percent, down 10.9 basis points from the yield at the previous auction. The government accepted higher yields for 364-day T-bills after five consecutive weeks of rejecting all bids for this maturity. The one-year paper fetched an average yield of 8.482 percent, up 63.1 basis points. National Treasurer Omar Cruz attributed the softer rates for the 91-day and 182-day T-bills to last month’s budget surplus, the financial system’s liquidity and expectations that the suspension on the expanded value-added tax will soon be lifted. The government posted its second monthly budget surplus for this year in June of P246 million, aided by improved tax collection and controlled expenditures. In the first six months, the budget gap was P67.5 billion, well below the P98.515 billion ceiling for the period. Liquidity in the financial system has been high because the government has rejected bids in recent treasury auctions and banks have been slow to lend money. In addition, government officials are confident that the VAT suspension would be lifted soon following oral arguments before the Supreme Court last week. "It (the auction) gives us a very constructive outlook as to how the market is looking at the fiscal position," Cruz told reporters. "There is conviction that the fiscal condition is sound and reforms are in place." The Treasury accepted an additional P800 million for 91-day paper, awarding a total P2.8 billion in Monday’s auction to take advantage of the sharply lower interest rates. As for the one-year bills, the Treasury finally accepted tenders after five consecutive weeks of rejecting bids that tended to push the yields sharply higher. |
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