RATES OF Treasury bills (T-bill) on offer today will likely slip further across all tenors amid robust demand from investors following the recent cut in banks’ reserve requirements.

The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bill) today, broken down into P4 billion and P5 billion in three- and six-month papers, respectively, and P6 billion in one-year securities.

Traders said yields on the T-bills to be auctioned off on Monday will likely decline by five to 10 basis points (bp) across all tenors from the previous offer.

The Treasury borrowed P15 billion as planned at its T-bills auction last week, fetching bids totalling P54.6 billion. Yields on the three-month, six-month and one-year papers slipped to 5.389%, 5.768% and 5.936%, respectively.

“Mostly (the auction will be driven by) client demand because it’s short-term. The lower RRR (reserve requirement ratio) will be factored in,” a trader said in a phone interview.

The Bangko Sentral ng Pilipinas on Thursday ordered a series of reductions in big banks’ RRR. The rate will be reduced to 17% effective May 31, 16.5% effective June 28 and to 16% effective July 26.

Big banks are currently required to keep in reserve at least 18% of deposits — a share considered as the highest in the region. The BSP has said that trimming the RRR by a percentage point will likely unleash about P90-100 billion into the financial system.

“Banks and other financial institutions will have additional funds to invest. Considering that rates of the T-bills are quite good, they will probably invest,” the trader said in a mix of English and Filipino.

Kevin S. Palma, trader at Robinsons Bank Corp., said strong demand will be seen across the board as the market may position ahead of the first RRR cut, projecting that rates across all tenors will likely go down by 5-10 bps from the previous offer.

“Investors continue to show appetite for short dates given the uncertainties brought by the US-China trade spat,” he added.

Trade tensions between the world’s two largest economies simmered anew after both the US and China imposed tit-for-tat tariffs on each other’s imports. However, US President Donald J. Trump allayed fears of market watchers last week, saying its deal with China has not collapsed and that both countries are having a “little squabble.”

“Reinvestment requirements from a P13.5-billion T-bill maturity on May 22 should also fuel demand,” Mr. Palma added.

The government plans to borrow P315 billion from the domestic market this quarter, broken down into P195 billion in T-bills and P120 billion in Treasury bonds.

It wants to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — Karl Angelo N. Vidal

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