T-bill rates fall to historic lows
By Michelle Remo
Philippine Daily Inquirer
MANILA, Philippines—Treasury bill rates fell to historic lows across all maturities on Monday as substantial liquidity prompted banks to scramble for the virtually risk-free government securities.
The significant volume of bids not only brought down rates to new lows, but also made Treasury officials decide to open a tap facility wherein additional bills will be sold to banks that failed to get allocations from the auction on Monday. The tap facility will be open on Tuesday and the government targets to sell P9 billion worth of bills through this venue on top of the P9.6 billion auctioned on Monday. “There is quite a big improvement in the government’s fiscal performance and this partly led to the decline in the rates sought by investors,” Deputy Treasurer Eduardo Mendiola said in a briefing after Monday’s auction for the short-term government securities. He said confidence in the government’s fiscal standing and ability to pay liabilities gave no reason for investors to seek higher rates, especially since they have substantial cash in their hands. The bellwether 91-day bills fetched only 0.68 percent, falling 22 basis points from the previous low of 0.90 percent registered in the auction two weeks ago. Tenders for the three-month government securities reached P7.57 billion, but the government’s auction committee decided to sell only P2.1 billion worth of bids to avoid going significantly beyond the originally programmed three-month borrowing of P1.5 billion. The rate for the 182-day bills settled at 0.898 percent, down 30.7 basis points from 1.205 percent. Bids for the six-month bills amounted to P11.87 billion, but the government observed its borrowing program for Monday and sold only P3.5 billion worth. The 364-day bills fetched 1.968 percent, also down 22.3 basis points from 2.191 percent. Bids for the one-year bills amounted to P11.5 billion, although the government sold only P4 billion to stick to its borrowing program. The government decided to sell additional securities through the tap facility to get an even lower interest rate. Securities to be sold through the tap facility carry a rate equivalent to the average of the best 50 percent of bids that were not serviced during the regular auction. Mendiola said another factor that prompted investors to accept lower rates was the slightly improved inflation scenario. Inflation in the first quarter stood at 4.1 percent, still within the 3- to 5-percent target for the full year.
May 1 package being finalized by Malacañang
NON-WAGE BENEFITS could be announced by Malacañang on Labor Day, a Cabinet official yesterday said, with the package likely to include health care and housing assistance for workers.
"We are exploring non-cash [benefits] with Pag-IBIG Fund and PhilHealth. We are looking on what they can offer and at the rate at which they can give it," Labor Secretary Rosalinda D. Baldoz said. Emma Linda B. Faria, Pag-IBIG chief executive officer, said the agency would soon be forwarding nearly P8 billion in dividends to members. "We have announced that we would give a total of P7.88 billion in dividends last year," she said in a telephone interview. "This will be credited to every member with a savings account with us and would result in 4.1% earnings for each member." With wage hike hearings unlikely to be finished in time for May 1 celebrations, Ms. Baldoz said President Benigno S. C. Aquino III could also announce his support for a two-tiered wage system comprised of floor pay and productivity incentives. "The National Tripartite Industrial Peace Council has agreed in principle to work out the operational guidelines," she said. The system will, however, take a while to be established. "I think this will not be implemented until after three years, or 2014, because we have to settle the technicalities of the productivity incentive tier," Ms. Baldoz said. Malacañang said Mr. Aquino planned to have a breakfast meeting with labor groups as part of May Day celebrations. The Trade Union Congress of the Philippines, which has asked the Metro Manila wage board for a P75 across-the-board adjustment, said it was waiting for its invitation.
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