T-bill rates down after weak GDP growth

The Philippine government was able to raise its full target of short-term debts in Tuesday’s Treasury bill (T-bill) auction. Yields fell across the board following a slower-than-expected economic growth and benign inflation.

Auction results showed the government borrowed P22-billion as planned. The T-bills, attracted a total of P98.3 billion in bids. This was 4.5 times the original offering.

“T-bill average auction yields were slightly lower for most weeks over the past five months, following slower or worse-than-expected third-quarter GDP growth of 4 percent and relatively benign inflation of 1.7 percent in October,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

The 91-day T-bill fetched an average rate of 4.821 percent, down 5.3 basis points from last week’s 4.874 percent.

The average yield for the 182-day T-bill stood at 4.981 percent, down 4.5 bps from 5.026 percent seen in the last offering.

Lastly, the 364-day debt note reached an average rate of 5.054 percent, 4.5 bps less than the previous 5.099 percent.

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The softer rates, Ricafort said, reflect investor caution amid the slowdown in economic activity. He said this opens the door for further monetary easing by the Bangko Sentral ng Pilipinas (BSP).

The third-quarter GDP result marked the economy’s weakest performance since the first quarter of 2021 and was much more anemic than what had been priced in by market consensus.

The slowdown was driven by a series of typhoons and government spending cuts amid an infrastructure-related corruption scandal.