THE GOVERNMENT made a partial award of the P20 billion it planned to raise through the auction of Treasury bills (T-bills) yesterday, with yields rising across the board as market players await leads from the US this week.

The Bureau of the Treasury’s (BTr) offer yesterday was met with P31.5 billion in demand, well above program, but it only borrowed P16.5 billion via the three-month, six-month, and one-year debt papers as banks asked for higher returns.

Broken down, the Treasury made a full award of the P9 billion programmed under the 91-day tenor as it received bids worth P18.72 billion. The average rate rose to 2.321% from the 2.233% fetched during the previous auction.

Meanwhile, the government only borrowed P4.615 billion in the 182-day T-bills out of the P6 billion it offered, even as it received P6.965 billion worth of tenders from banks. Following the partial award, yields went up to 2.577% from 2.519% in the previous auction.

The 364-day securities were also partially awarded, with the Treasury accepting just P2.853 billion out of the P5.853 billion put forward by market players.

The accepted tenders for the one-year tenor fell short of the P5 billion the Treasury intended to offer, driving the average yield up to 2.925% from the 2.849% fetched in the previous auction.

“We saw that the demand came from the shortest end, which is the 91-day T-bill rate. We had the double the size on offer on that, but for the others, it’s a little bit over the offer size,” Deputy Treasurer Erwin D. Sta. Ana told reporters after the auction.

The P31.5 billion worth of total tenders was lower than the P50.1 billion of demand the Treasury saw in the previous T-bills auction.

“We think the liquidity is there but we can sense that the market is waiting for some leads,” Mr. Sta. Ana added, citing the upcoming meeting of US Federal Reserve’s policy makers and US President Donald J. Trump’s second State of the Union address.

Although analysts are expecting no policy change or surprises at the Jan. 30-31 Federal Open Market Committee meeting, Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines, said in a previous interview that there might be “hawkish hints” from the Fed’s policy makers.

The meeting will be the last for Fed Chair Janet L. Yellen, as she will be replaced by Jerome H. Powell.

Meanwhile, Mr. Trump is expected to tackle in his Jan. 30 State of the Union address five key policy areas: jobs and the economy, infrastructure, immigration, trade, and national security, according to CNBC.

Sought for comment, a trader said: “We still continue to see demand for the shorter end but players are asking for higher rates given the increases in US Treasuries and oil prices over the past weeks,”

Asked why the Treasury did not accept other offers for the six-month and one-year papers to fill its planned borrowing, the trader said the BTr is in a robust cash position following its successful retail Treasury bond offering late last year, where it raised P255.4 billion in fresh funds.

“I think its robust cash position will allow them to navigate through the volatile interest rate environment that we have right now,” the trader added.

The BTr plans to auction off P120 billion worth of Treasury bills and another P120 billion worth of Treasury bonds in the January to March period. This is higher than the P200 billion the government offered in the last quarter of 2017. — K.A.N. Vidal