BENCHMARK interest rates dove to fresh lows amid strong demand for Treasury bills because of a huge volume of maturing debt papers that would further increase liquidity.
On Monday’s auction, the Bureau of Treasury raised P9.6 billion, higher than its original offering of P9-billion worth of T-bills.
Despite the over-subscription, the government opened its over-the-counter facility to quench market appetite.
The tap facility would be open until 5 p.m. Tuesday, selling another P9-billion worth of 91-, 182- and 364-day debt papers.
“We will accept another P9 billion from clients. Such amount is what we are allowed under the auction rules,” Deputy Treasurer Eduardo Mendiola said after the auction.
Mendiola attributed the strong appetite for T-bills to the P26-billion worth of maturing debt papers within the week.
“The P26 billion maturing T-bills would further flood the market with so much liquidity, and thus it needs to be reinvested,” Mendiola said.
Besides the maturing T-bills, he also cited the manageable inflation and the better-than-expected fiscal deficit.
“The fiscal deficit made a lot of difference, even on a year-on-year basis since during the same period last year the budget shortfall was at P52.3 billion. Now compare that to the mere P8.1 billion,” he said.
During the auction, the government sold P2.1-billion worth of 91-day T-bills, higher than he P1.5-billion offering after demand swelled to P7.568 billion.
The three-month rate slumped to an all-time low of 0.68 percent from the previous record of 0.7 percent on January 10. The 91-day rate stood at 0.9 percent a fortnight ago.
At the secondary market, done deals for debt papers of the same maturity stood at 0.85 percent.
The auction committee awarded in full the P3.5-billion worth of 182-day T-bills on offer, as the rate fell by 30.7 basis points to 0.89 percent from the previous 1.205 percent.
Done deals for the same securities at the secondary market were last quoted at 0.91 percent, or 2 basis points higher than the rate quoted during the auction.
The six-month T-bill was more than three times oversubscribed.
The rate for the one-year T-bill also fell to a new low of 1.968 percent from the 2.191 percent a fortnight ago, prompting the government to make a full award of P4 billion.
Tenders for the 364-day IOUs reached P11.5 billion, or almost three times higher than the P4 billion on offer.
At the secondary market, done deals for the one-year paper fetched two percent.