T-bill rates fall to historic lows By Michelle Remo Philippine Daily Inquirer
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.
"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. |
U.S. Stocks Tumble After S&P Reduces Country's Long-Term Credit Outlook U.S. stocks slumped, sending benchmark indexes to their biggest declines in a month, after Standard & Poor’s Ratings Service cut the nation’s long-term credit outlook to negative. Caterpillar Inc. and United Technologies Corp. sank at least 2.1 percent to help pace the declines in the Dow Jones Industrial Average. The Morgan Stanley Cyclical Index dropped 1.2 percent as 26 of its 30 stocks tumbled. Exxon Mobil Corp. and Chevron Corp. dropped more than 1.4 percent amid concern that China’s efforts to cool inflation will hurt the economy. The S&P 500 declined 1.1 percent to 1,305.14 at 4 p.m. in New York, its biggest retreat since March 16. The Dow average tumbled 140.24 points, or 1.1 percent, to 12,201.59. “There are a lot of structural issues that need to be dealt with,” said Mike Ryan, the New York-based chief investment strategist for Wealth Management Americas at UBS Financial Services Inc., which oversees $741 billion. “Anytime you see anything that suggests that the rating could be subject to downgrade, it’s perceived negatively. If this were to raise funding costs for the government, then it would weigh on economic prospects. It’s clearly not positive for companies.” The S&P 500 had rallied 4.9 percent this year through April 15 amid higher-than-estimated corporate earnings and government stimulus measures. The Fed and U.S. agencies have lent, spent or guaranteed about $8.2 trillion to lift the economy from the worst slump since the Great Depression, according to data compiled by Bloomberg.
U.S. 30- and 10-year securities gained after falling earlier as Standard & Poor’s lowered its outlook for the U.S. credit rating to negative from stable. The Treasury sold $28 billion in six-month bills at a rate that matched a record low. “The geopolitical concerns haven’t gone away, and we are seeing safety flows into Treasuries,” said Russ Certo, a managing director and co-head of rates trading at Gleacher & Co. in New York. “As the dust clears, we are in the here and now of geopolitical concerns rather than the future of uncertainty of what may happen with ratings.” Yields on 10-year notes dropped three basis points, or 0.03 percentage point, to 3.38 percent at 5 p.m. in New York, according to Bloomberg Bond Trader prices. They touched 3.36 percent, the lowest since March 24. The 3.625 percent securities maturing in February 2021 gained 1/4, or $2.50 per $1,000 face amount, to 102 1/32. Thirty-year bond yields slipped one basis point to 4.46 percent. The two-year note yield decreased four basis points to 0.65 percent and touched 0.64 percent, the lowest level since March 24. Ten-year yields are still down from 3.80 percent a year ago. They averaged 5.22 percent over the past two decades. The benchmark notes will yield 3.90 percent at year-end, according to the median forecast of 73 economists in a Bloomberg survey. |
Oil Near Three-Day Low After China Bank Move Prompts Fuel-Demand Concerns Oil traded near a three-day low in New York after China, the world’s second biggest crude-consuming nation, increased banks’ reserve requirements to cool inflation, signaling fuel demand growth may slow. Futures slipped 2.3 percent yesterday after the country’s central bank governor, Zhou Xiaochuan, said monetary tightening will continue for “some time.” Reserve ratios will rise a half point from April 21, the People’s Bank of China said, pushing the requirement to a record 20.5 percent for the biggest lenders. “The fact that the Chinese are taking measures because their economy is so strong seems to be taking air out of the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. Crude oil for May delivery traded at $107.38 a barrel, up 26 cents, in electronic trading on the New York Mercantile Exchange at 8:33 a.m. Sydney time. Yesterday, it slid $2.54 to $107.12, the lowest since April 13. The more-actively traded June contract gained 21 cents to $107.90. Prices also declined yesterday after Saudi Arabian Oil Minister Ali al-Naimi said that the market is “oversupplied.” The kingdom is the world’s biggest crude exporter. Brent crude oil for June settlement dropped $1.84, or 1.5 percent, to $121.61 a barrel on the London-based ICE Futures Europe exchange yesterday. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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