THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered yesterday after yields sought by banks mostly declined on the back of market preference for shorter-termed papers amid geopolitical noise offshore.

The Bureau of the Treasury raised P15 billion as planned from its auction of 91-day, 182-day, and 364-day securities during its auction on Monday. The offer was more than twice oversubscribed, with bids totalling P32.3 billion.

“We made a full award of the three short-term tenor buckets. We see healthy demand in the short end of the curve. We’ve also seen — except for the 182-day T-bills — a marginal decline in terms of the rates the banks offered, so these really indicate that there is still demand on the short end,” National Treasurer Rosalia V. de Leon told reporters after the auction.

The government raised P6 billion from the 91-day T-bills as planned after banks wanted to buy as much as P16.196 billion of the papers, nearly three times the offer and cornering half of Monday’s total T-bill bids. The three-month papers fetched a rate of 2.161% during Monday’s auction, 1.5 basis points (bps) lower than the 2.176% yield seen during the July 31 auction.

Similarly, the Treasury bureau was also able to raise P5 billion from the three-month T-bills as programmed. Bids for the 182-day papers reached P6.179 billion, with the T-bills fetching an average rate of 2.677%, up 4.8 bps from the 2.529% seen two weeks ago.

Lastly, the government also made a full P4-billion award of the 364-day securities, with total tenders coming in at P9.917 billion, more than double the offer. The debt papers were quoted at 2.946%, down 2.6 bps from the 2.972% yield fetched during the previous exercise.

At the government’s last offering of T-bills on July 31, the government raised P15 billion as planned amid strong market appetite for shorter-tenored papers, after total tenders reached P31.9 billion, more than twice the offer size.

At the secondary market before yesterday’s auction, the 91-day, 182-day and 364-day T-bills were quoted at 2.7839%, 2.9143% and 3.0625%, respectively.

The yield on the three-month papers rallied to 2.2% at the close of trading at the secondary market on Monday, while rates of the six-month and one-year papers ended steady at 2.9143% and 3.0625%.

Meanwhile, the National Treasurer said the market remains “liquid” despite persisting tensions between the United States and North Korea.

US President Donald J. Trump issued warnings against North Korea several times last week following Pyongyang’s statements on its plans to release nuclear missiles in Guam.

“The central bank governor assured the market that [there are] no [expectations of] the free fall of the peso. This is really more of a knee-jerk reaction given already the geopolitical tensions between North Korea and the US,” Ms. de Leon added.

Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla, Jr. said on Sunday that they do not foresee a sharp decline of the peso versus the dollar as the country’s economic fundamentals remain “very solid and very strong.”

The peso logged multi-month lows last week due to increasing tensions between the US and North Korea, with the local unit ending at its weakest level in nearly 11 years as it closed at P50.98 versus the greenback, or its worst finish since it ended at P51.05 per dollar on Aug. 29, 2006.

Yesterday, the peso weakened further, closing at P51.08 against the greenback.

“Inflation continues to be very benign and we see that strong fundamentals of the economy, even in terms of the growth projections of the survey of economists. And recently, [National Economic and Development Authority] Sec[retary Ernesto M.] Pernia made the announcement that…the GDP (gross domestic product) will be on the higher end of the range. These are really very solid fundamental reports coming out of the Philippines so we still have a very strong investor confidence in the economy,” the National Treasurer said.

Mr. Pernia said the government expects second-quarter GDP growth to be faster than first quarter’s 6.4% pace on the back of robust public spending.

The government targets GDP growth to reach 6.5-7.5% this year from 2016’s actual 6.9% that was just below the top end of an official 6-7% goal.

Sought for comment, a bond trader said yesterday’s yields were well within market expectations “except for the six-month paper, but it got awarded nonetheless.”

The trader also said local factors that drove rates to go down were investor appetite for short-tenored debt notes.

“Demand for short-term papers remains robust. Investors are not keen on buying bonds with longer tenors,” the trader said.

The government plans to borrow as much as P195 billion from domestic sources this quarter — through offerings of P105 billion worth of T-bills and P90 billion in Treasury bonds —more than the P180 billion programmed in the second quarter.

Meanwhile, the National Treasurer said they are looking at a five to seven-year tenor for the government’s plan to issue P30 billion “patriotic bonds” for the rehabilitation of Marawi City.

“[There are] indications from the market before but it’s really more maybe five to seven years tenor [because] that is where the appetite is right now. There is not really much going forward into the long term, the longer tenor,” Ms. de Leon said.

Finance Secretary Carlos G. Dominguez III had announced last week they are mulling to issue P30 billion bonds, with funds to be raised to be earmarked for the repair of public and private infrastructure in Marawi. — Janine Marie D. Soliman

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