THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates dipped across the board on expectations that the Bangko Sentral ng Pilipinas (BSP) will keep benchmark rates at their record lows this week.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P72.51 billion, nearly five times as much as the initial offer and also higher than the P63.273 billion in bids logged in the previous auction.

Broken down, the BTr raised P5 billion as planned via the 91-day debt papers from P21.62 billion in bids. The three-month T-bills fetched an average rate of 1.07%, down by 0.9 basis point (bp) from the 1.079% seen at last week’s offering.

It also borrowed the programmed P5 billion via the 182-day T-bills as the tenor attracted bids worth P26.47 billion. The six-month paper’s average yield also went down by 1.3 bps to 1.389% from 1.402% a week ago.

Lastly, the government made a full P5-billion award of the 364-day papers from P24.42 billion in tenders. The one-year securities fetched an average rate of 1.597%, dipping by 0.7 bp from 1.604% previously.

National Treasurer Rosalia V. de Leon said strong demand for the short-term debt, coupled with the P20 billion in maturities this week, helped pull down T-bill yields at Monday’s auction.

She said the market also priced in expectations of a steady monetary policy stance from the BSP at its rate-setting meeting on Thursday.

A BusinessWorld poll conducted last week showed 17 out of 18 analysts expect the BSP to keep benchmark rates at record lows at its policy review on Sept. 23.

Analysts said the BSP may look past rising inflation as economic recovery remains “fragile.”

Headline inflation quickened to 4.9% in August from 4% in July, its fastest pace in more than two years or since the 5.2% seen in December 2018, amid rising food and utility costs.

This brought the eight-month average to 4.4%, above the central bank’s target of 2-4% and forecast of 4.1% for the year.

A bond trader said T-bill yields slipped on Monday as the market remains awash with cash.

“While the T-bill rates are lower than previous week’s auction, we don’t expect it to dip further. The result just reflects that the system is still very much liquid,” the bond trader said in a Viber message on Monday.

The trader said concerns over the possible extension of strict quarantine restrictions in Metro Manila may also put more pressure on government securities’ rates as this may dampen recovery prospects.

“If it happens, then there will be a spillover of slow economic activity into the fourth quarter. That is crucial because these are the festive months,” the trader added.

The new alert level system of granular lockdowns is now being implemented in Metro Manila. The scheme will allow local governments to place stringent lockdown measures in areas with high coronavirus infections to curb the spread of the virus while allowing the rest of the economy to function.

The capital region is under Alert Level 4 from Sept. 16 until the end of the month. National Task Force Against COVID-19 Spokesman Restituto Padilla, Jr. said over the weekend that this status — the second highest level — may be extended by two weeks before there is significant improvement in data.

The BTr will auction off P35 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of six years and 10 months on Tuesday.

The Treasury is looking to raise P250 billion from the local market this month: P75 billion via weekly offers of T-bills and P175 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — Beatrice M. Laforga