THE GOVERNMENT made a full award of the Treasury bills (T-bills) offered on Monday despite higher rates as investors flocked to safe-haven assets amid increased liquidity.

The Bureau of the Treasury (BTr) awarded P20 billion as planned in T-bills on Monday out of total tenders worth P37.6 billion, snapping four consecutive auctions of full rejections amid soaring yields.

It fully awarded P10 billion in 91-day papers out of total tenders of P15.95 billion at an average rate of 3.413%, up 38.9 basis points (bps) from the 3.024% quoted at the last successful auction on March 16.

The BTr also accepted P5 billion as programmed via 182-day T-bills, with the tenor attracting bids worth P10.915 billion. The six-month papers fetched an average rate of 3.553%, higher by 15.5 bps from 3.398% previously.

For the 364-day papers, the government also raised P5 billion as planned from P10.81 billion in bids. The average rate for the one-year securities rose 28.8 bps to 3.845% from 3.557% previously. 

National Treasurer Rosalia V. de Leon said they decided to make a full award on Monday as rates fell within their estimates, with investors having “liquidity that needs to be put to work.”

“Rates within internal estimates and secondary levels. Market continues to remain cautious as the duration of the lockdown is uncertain. But at the same time, we have to deploy liquidity from the RRR (reserve requirement ratio) cut,” Ms. De Leon told reporters in a Viber message on Monday.

A bond trader said the BTr could not afford to keep rejecting bids as the government plans to boost spending to contain the coronavirus disease 2019 (COVID-19) outbreak while keeping the economy afloat.

However, the trader said rates “are not that bad either because they are getting one-year rates near Bangko Sentral ng Pilipinas’ (BSP) overnight rate.”

“Rates are already higher, but if compared to last week when they rejected, this week’s levels are better. Also, this issuance is timely as they have maturity this week of RTB (Retail Treasury Bonds) 3-8 amounting to P121 billion,” the trader said in a Viber message. 

Ms. De Leon said there will also be a redemption of P16 billion in debt, which will add to market liquidity. 

The full award to end the series of rejections may be a signal of a “stabilizing” market, the trader said, as banks with too much cash and limited lending opportunities are likely to choose safer assets.

Around P180 billion to P200 billion in fresh cash was infused into the financial system after the 200-bp cut in universal and commercial banks’ RRR which took effect on Friday, which brought it down to 12%.

BSP Governor Benjamin E. Diokno has been authorized by the Monetary Board to cut banks’ RRR by a total of 400 bps this year. The central bank had said reductions to the reserve ratios of other banks and nonbank financial institutions are also being studied. 

The Treasury has set a P190-billion local borrowing program for April, broken down into P130 billion in T-bills and P60 billion in Treasury bonds. — Beatrice M. Laforga