THE GOVERNMENT partially awarded the Treasury bills (T-bill) it offered on Monday to temper the rise in rates as yields bid by banks climbed across all tenors amid slower-than-expected inflation.
The Bureau of the Treasury made a partial award of the short-dated securities, raising just P12.369 billion out of the P15 billion it intended to borrow yesterday.
Total tenders received at the auction stood at P24.08 billion, lower than the P29.67 billion offered a week ago but still above the planned borrowing.
Broken down, the Treasury made a full award of the P5 billion programmed under the 91-day tenor, with bids amounting to P8.92 billion. The average rate rose by 2.7 basis points to 3.323% from the 3.296% fetched during the previous auction.
The government also awarded P4 billion as planned from the 182-day papers. The offer was likewise oversubscribed as tenders reached P7.231 billion, even as the average yield climbed by 3.7 basis points to 3.714% from the 3.677% quoted at the auction last week.
Meanwhile, the 363-day debt papers were partially awarded, with the BTr only accepting P3.369 billion out of the P7.839 billion tendered by banks and other financial institutions, falling short of the P6 billion it offered. The average rate went up 7.8 basis points to 4.324% from the 4.246% posted last week.
At the secondary market before the auction, the three-month papers were quoted at 3.865%, while the six-month tenor fetched 4.1393%. The yield on the one-year T-bill, on the other hand, was at 4.4917%.
At the close of trading, the 91-day and 364-day rallied to fetch 3.3203% and 4.2354%, respectively, while the 182-day paper’s rate was steady at 4.139%.
After the auction, National Treasurer Rosalia V. De Leon told reporters that the government opted to partially award the one-year papers following the slower-than-expected May inflation print.
“We are trying to temper the increase [in rates] in terms of the one-year [papers because] if you would look at the inflation print last May, it was just 4.6%,” Ms. De Leon said on Monday.
Headline inflation accelerated to a new five-year high of 4.6% last month, a tad faster than the 4.5% logged the previous month. However, this was slower than the market expectation of 4.9%.
“Also, based on what [Bangko Sentral ng Pilipinas] officials have more or less said, we deemed that probably inflation is already tapering and it might have already reached the peak,” Ms. De Leon explained. “There is basically no need for investors to ask for higher rates, so we cut it at that level. We are just tempering the increase in the rates right now.”
Meanwhile, a trader said there was good demand for the T-bills auction despite the settlement of the retail Treasury bonds (RTBs) sold by the government.
“We saw slightly higher rates for the T-bills, although there is demand because the focus of the market was still on the RTBs,” the trader said in a phone interview. “The result was still good and there was still demand.”
Ms. De Leon said the Treasury raised P121.765 billion from the government’s 21st RTB offering last week as it saw strong demand from the public.
“We had a very good reception. The total amount that we were able to issue was about P121.765 billion, so that’s within our expectation given the rates for the three years that we offered,” Ms. De Leon said.
The three-year retail bonds carry a coupon of 4.875% and will mature in 2021.
Proceeds from the RTB issuance will be used to fund the government’s projected fiscal deficit for the year and compensate for the rejections the Treasury made during its recent auctions.
Aside from this, plans for another dollar bond float as well as yen-denominated “samurai” papers are also being finalized.
The government plans to borrow a total of P888.23 billion this year to plug its budget deficit that is capped at three percent of the country’s gross domestic product. — KANV

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