THE GOVERNMENT upsized its award of the Treasury bills it offered on Monday as rates dropped across the board following dovish signals from the Bangko Sentral ng Pilipinas (BSP).

The Bureau of the Treasury (BTr) raised P28.6 billion from the T-bills it auctioned off on Monday, higher than the P25-billion plan, as total bids reached P84.255 billion, more than thrice the amount on offer and also higher than the P78.388 billion in tenders recorded on May 19.

The oversubscription prompted the auction committee to double its acceptance of non-competitive bids for the 364-day T-bills to P7.2 billion, the BTr said in a statement.

Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills on Monday as tenders for the tenor reached P25.565 billion. The three-month paper was quoted at an average rate of 5.468%, 4.7 basis points (bps) lower than the 5.515% seen in the previous auction. Tenders accepted by the BTr carried yields of 5.444% to 5.497%.

The government likewise made a full P8-billion award of the 182-day securities it auctioned off as bids for the paper amounted to P30.275 billion. The average rate of the six-month T-bill was at 5.551%, 6.1 bps below the 5.612% fetched last week, with accepted rates ranging from 5.508% to 5.6%.

Lastly, the Treasury raised P12.6 billion via the 364-day debt papers, higher than the P9-billion program, as demand for the tenor totaled P28.415 billion. The average rate of the one-year T-bill slipped by 0.8 bp to 5.694% from 5.702% previously, with bids accepted having yields of 5.65% to 5.704%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4551%, 5.6098%, and 5.7398%, respectively, based on the PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The BTr said it made a full award of its T-bill offer as the average rates fetched for all tenors were all lower than the levels seen at the previous week’s auction.

“It looks like the recent announcement from BSP that they are confident about future rate cuts did wonders for today’s auction. This resulted in strong bids and the eventual full award, including the additional award for one-year bills,” a trader said in a text message.

Rizal Commercial Banking Corp., Chief Economist Michael L. Ricafort likewise said in a Viber message that T-bill rates eased following the latest rate cut signals from BSP Governor Eli M. Remolona, Jr.

On Friday, Mr. Remolona said that the Monetary Board could deliver two more 25-bp cuts this year, with the next reduction on the table as early as next month.

The BSP chief said easing inflation gives them “plenty of room” to ease their policy stance further, although they don’t want to cut “too much” as this could stoke prices anew. 

In April, the Monetary Board cut benchmark interest rates by 25 bps to bring the policy rate to 5.5%. It has now reduced borrowing costs by a cumulative 100 bps since beginning its easing cycle in August last year.

There are four remaining Monetary Board policy meetings this year scheduled for June, August, October and December.

On Tuesday, the government will offer P30 billion in reissued 20-year Treasury bonds (T-bonds) with a remaining life of 13 years and eight months.

The Treasury is looking to raise P260 billion from the domestic market this month, or P100 billion via T-bills and P160 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy

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