By Elijah Joseph C. Tubayan,
Reporter

THE GOVERNMENT fully awarded P15 billion in Treasury bills (T-bills) offered in Monday’s auction, while yields were relatively flat as market players await the nomination of the next US Federal Reserve chair.

The Bureau of Treasury (BTr) received offers reaching P52.1 billion, more than three times the amount it wanted to raise as it auctioned off three-month, six-month and one-year debt papers.

Broken down, the government fully awarded the 91-day T-bills after total bids reached P25.47 billion, more than thrice the P6 billion offered. The papers fetched an average rate of 1.957%, steady from the 1.958% yields posted during the Oct. 9 auction.

For the 182-day debt papers, it raised P5 billion as planned at an average rate of 2.457%, unchanged from the previous auction, after banks sought to buy as much as P14.03 billion.

Lastly, the Treasury bureau also fully awarded P4 billion as planned for the 364-day papers, fetching an average yield of 2.863%, about 3.3 basis points up from the 2.82% recorded earlier. The offer attracted as much as P12.63 billion in tenders, nearly thrice more than the original program.

Prior to Monday’s auction, the secondary market recorded yields on the 91-day papers at 2.4375%, the 182-day at 2.7589%, and 364-day T-bills at 2.8511%.

At the market’s close, the three-month and six-month yields increased to 2.225%, and 2.46%, respectively, while the one-year rates slid to 2.8505%, respectively.

National Treasurer Rosalia V. de Leon said yields were relatively steady as markets are still waiting for US President Donald J. Trump’s decision on who would chair the US central bank.

“So everybody is more on a wait-and-see attitude for now, so more on staying sideways. Depending on the pronouncement from the Fed by Nov. 3, the new Fed chair, of course even depending on what would be the Fed chair’s attitude in terms of hawkish or dovish, in terms of the rate hike,” Ms. De Leon told reporters after the auction yesterday.

“So I think, also the market is looking also for fresh leads in terms of rates,” she added, while noting investors’ sentiment remained stable given the within-target 3.1% inflation in the third quarter, which was unchanged from the previous quarter.

Bond traders, however, said despite flat yields, investors have started to seek higher rates given the heightened probability of a December Fed policy tightening, as Mr. Trump has already given hints on his Fed pick.

“The result was unexpected, they should already be higher, because they are expecting the Fed to hike interest rates come December. The probability already increased from 70% a week ago up 83%,” a trader said in a phone interview.

“The next Fed chair is either [Fed Governor Jerome] Powell or [Stanford economist John] Taylor. If Taylor gets elected, expect yields to go higher, and if it’s Powell, it’s about flat,” he added.

Another trader said “there’s already a threat that the yields will increase,” noting the lowest rates offered yesterday had already inched up from the previous auction.

“This means investors are demanding more,” the trader said in a separate phone interview.

The government plans to raise up to P150 billion from domestic sources this quarter, lower than the P195 billion programmed between in the previous three months, and forming part of the P727.64-billion borrowing plan for 2017.

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