THE GOVERNMENT increased the amount of Treasury bills (T-bills) it accepted on Monday as rates continued to decline across the board amid robust liquidity in the market.

The Bureau of the Treasury (BTr) raised P21 billion in T-bills on Monday, higher than the programmed P15 billion, as it doubled its acceptance of non-competitive bids across all tenors.

Total tenders reached P100.296 billion on Monday, making the auction 6.6 times oversubscribed. This was also higher than the P92.52 billion in bids seen in the previous week’s auction.

Broken down, the BTr borrowed P7 billion via the 91-day T-bills from P28.229 billion in bids, up from the initial plan to raise just P5 billion. The three-month debt fetched an average rate of 1.118%, down by 5.8 basis points (bps) from the 1.176% seen last week.

The government raised another P7 billion from the 182-day papers versus the original P5-billion program as tenders hit P34.037 billion. The tenor’s average rate likewise dipped by 5 bps to 1.372% from 1.422% previously.

For the 364-day securities, the Treasury also upsized its award to P7 billion from the P5-billion plan, with demand for the papers reaching P38.03 billion on Monday. The one-year instruments were quoted at 1.577%, declining by 7.2 bps from the 1.649% fetched for the tenor last week.

National Treasurer Rosalia V. de Leon said yields dropped across all tenors as the market was awash with cash following  the redemption of retail Treasury bonds (RTBs) worth P131 billion.

“Liquidity looking for outlets as [the] RTB maturity further bolstered ample funds onshore, searching for yields,” Ms. De Leon said in a Viber message to reporters after Monday’s auction.

Meanwhile, a bond trader attributed the decline in T-bill rates to “easing inflation concerns and as investors continue to assess business prospects given the improvement in NCR (National Capital Region), but a corresponding increase in COVID cases in the countryside.”

Headline inflation was steady for the third straight month at 4.5% in May and fell within the 4-4.8% estimate of the Bangko Sentral ng Pilipinas (BSP).

Year to date, inflation averaged at 4.4%, higher than the 2-4% target of the BSP and its revised forecast of 3.9% for the year. May was the fifth month in a row that inflation went beyond target.

Meanwhile, health authorities in late May said new coronavirus cases have started to increase in cities and provinces outside the capital, while NCR and its nearby areas are experiencing a steady decline in new infections.

The Health department reported 7,302 new infections on Sunday, while active cases were at 59,865.

On Tuesday, the BTr will offer P35 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and 24 days.

The Treasury wants to raise P215 billion from the local debt market this month: P75 billion via weekly offers of T-bills and P140 billion from weekly auctions of T-bonds.

The government is looking to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.4% of gross domestic product. — Beatrice M. Laforga