THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday even as rates ended mixed, with demand staying strong partly due to some previously issued securities maturing this week.
The Bureau of the Treasury (BTr) borrowed P25 billion as planned via the T-bills on Monday as total tenders reached P71.596 billion, making the offer 2.86 times oversubscribed. This was a tad lower than the P71.65 billion in demand seen in last week’s offering.
It also opened its tap facility to raise an additional P5 billion via the one-year instruments.
Broken down, the BTr raised P5 billion as planned via the 91-day papers as total bids reached P15.375 billion. The three-month T-bills fetched an average rate of 1.369%, up by 2 basis points (bps) from the 1.349% quoted last week.
It also awarded the programmed P8 billion in 182-day debt from P26.245 billion in tenders. The average yield of the six-month papers inched up to 1.714% from 1.713% in the previous auction.
Lastly, the Treasury made a full P10-billion award of the 364-day securities it offered on Monday after the tenor attracted bids worth P29.976 billion. The one-year T-bill’s average rate slipped to 1.88% yesterday from 1.884% last week.
National Treasurer Rosalia V. de Leon said there was strong appetite for the T-bill offer amid overflowing liquidity in the market and with P70 billion worth of government securities maturing this week “recycled with preference for safe assets.”
Ms. De Leon said local yields are tracking US Treasury rates, which are currently “creeping down”.
This was reflected in the slight climb in the rates of the shorter-tenored 91-day and 182-day papers and the lower yield quoted for the longer 364-day T-bills, she added.
A bond trader echoed this, noting how investors are placing their excess funds in longer tenors in their search for higher returns.
“Money is flowing to safe, short-term assets. This may spill over to the three- to five-year space on yield pickup opportunities. The auction shows that the growth outlook is really on the lower side of projections, given the extended restrictions in NCR (National Capital Region),” the bond trader said via Viber.
NCR and its nearby provinces Bulacan, Cavite, Laguna and Rizal were placed under a hard lockdown for two weeks until April 11 amid spiking infection rates. Restrictions were eased slightly until April 30, with a decision on an extension or further relaxation of current lockdown measures still pending.
The Health department reported 8,162 new coronavirus cases on Sunday, bringing the country’s total infection tally to 997,523.
Excluding the tap facility offering on Monday, the BTr raised P200 billion from the local debt market this month, more than the programmed P170 billion, as it opened its tap facility on several occasions to take advantage of the low rates and strong demand seen during its auctions.
Broken down, the Treasury borrowed P105 billion via weekly offers of T-bills, exceeding its initial plan to raise P100 billion.
Meanwhile, it raised P95 billion from its Treasury bond auctions, higher than the P70-billion plan after it borrowed an additional P25 billion via seven-year papers in a tap offer.
The government is looking to borrow P3 trillion this year from domestic and external sources to help fund a budget deficit seen to hit 8.9% of gross domestic product. — B.M. Laforga