THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday as rates declined across-the-board amid strong demand.

The Bureau of the Treasury (BTr) accepted P20 billion in T-bills as planned out of the total tenders of P44.5 billion, which is more than twice as much as the programmed offer.

Broken down, the Treasury raised P6 billion as planned via the 91-day T-bills out of total bids worth P18.832 billion. The three-month papers fetched an average rate of 3.297%, lower by 9.3 basis points (bp) from the 3.39% yield fetched in the previous auction on Jan. 20.

The government borrowed another P6 billion as programmed via the 182-day papers which attracted tenders totaling P11.995 billion. The yield on six-month T-bills likewise dropped, inching down by 5.5 bps to 3.597% from the previous week’s rate of 3.652%.

For the 364-day securities, the Treasury accepted P8 billion as planned out of total bids worth P13.689 billion. The average rate for the one-year papers likewise dropped by 0.8 bp to 3.963% from 3.971% previously.

At the secondary market on Monday, the three-month and six-month T-bills were quoted at 3.303% and 3.516%, respectively, while the one-year securities fetched a rate of 3.874%.

National Treasurer Rosalia V. de Leon said the T-bill rates went down on the back of strong liquidity in the market as well as increasing appetite for shorter tenors.

A bond trader interviewed yesterday shared the same sentiment, citing global uncertainties such as the threat of an outbreak of the novel coronavirus that started in Wuhan, China. The trader said this pushed investors to favor the short end of the curve.

“The auction was oversubscribed that’s why the yields came lower…primarily because there’s also uncertainty in the coronavirus so I think people are tying to shorten the duration at the moment. Second, the remaining longer tenors have actually improved a little bit last week so the T-bills caught up,” the trader said via phone.

For Ms. De Leon, aside from uncertainties in the market, other developments that contributed to lower rates include the announcement of government’s offering of retail Treasury bonds (RTB) this week. Yields were also affected by the BTr’s euro-denominated bond sale last week, she said.

Last week, the Treasury raised €1.2 billion from its offer of the euro-denominated bonds — €600 million each for the two tenors of three years and nine years — at the average rates of 0.1% and 0.7%, respectively.

The Treasury has set a P420-billion local borrowing program this quarter, broken down into P240 billion in T-bills and P180 billion via Treasury bonds.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product.

RTB SALE STARTS TUESDAY
Ms. De Leon said they expect strong demand for the three-year RTBs they are offering starting today amid ample liquidity in the market and because the tenor has seen strong appetite from investors recently.

“So we are hopeful na (that) we will have good demand coming from investors when we do the auction tomorrow,” she told reporters on Monday.

“Right now, we’re going to auction P30 billion but as is always the case, if you can see na (that)good rates and we still see na (that) there will be a secondary or follow-up after the auction, then definitely we will upsize the offering,” Ms. De Leon added.

For the online facility of the RTB sale, she said banks that will offer the bonds are Land Bank of the Philippines, Development Bank of the Philippines and First Metro Asset Management, Inc.

The Treasury’s P30-billion RTBs will have a three-year tenor and will be offered starting Tuesday until Feb. 6.

However, the BTr has the right to upsize the offer or adjust the offer period.

The three-year papers will be issued on Feb. 11 and will mature in 2023.

RTBs are offered to small investors as they are low-risk, higher-yielding savings instruments backed by the national government.

“In the past issuances, we’ve heard about the complaints sa (in) branches that they have stopped offering dahil paubos na (because they are running out), or they are not offering. So we have warned the banks, and the selling agents eventually, that they should make sure that their branches would be selling this product. Although it competes with their own products, they have to make sure that RTB will be something na (that) they will be offering to the clients,” Ms. De Leon said. — B.M. Laforga

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