By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT made a full award of the Treasury bills (T-bill) it auctioned off on Monday, with rates on the longer tenors rising following the hints of a fresh rate hike from the central bank chief.
The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday.
The offer was twice oversubscribed as total tenders amounted to P32.9 billion, climbing from the P28.2 billion recorded at last week’s offering.
Broken down, the government borrowed P4 billion as planned via the 91-day tenor yesterday as tenders by investors totalled P10.431 billion. The average rate declined 7.2 basis points to 3.219% from the 3.291% logged in the previous auction.
For the 182-day T-bills, the BTr borrowed the programmed P6 billion out of the P8.996 billion offered by banks and other financial institutions. The average rate picked up by five basis points to 4.235% from the 4.185% tallied in the previous offering.
The Treasury also made a full award of the 364-day papers as it raised P6 billion as planned out of the total offers amounting to P13.489 billion. The average yield likewise rose by 4.2 basis points to 4.809% from last week’s 4.767%.
At the secondary market prior to the auction, three-month and six-month papers were quoted at 3.2354% and 4.3675%, respectively, while the one-year securities fetched a 4.6467% yield.
At the close of the trading, the 91-day T-bill saw its rate climb to 3.2905%, while the 182-day papers rallied to yield 4.2212%. The 364-day tenor also slipped to 4.6465%.
Following the auction, National Treasurer Rosalia V. De Leon said the bureau saw good results amid healthy market appetite.
“We had a full award for all tenors during the auction and we saw rates that we anticipate and are ready to accept,” Ms. De Leon told reporters on Monday.
She noted that the auction came after the “very strong” pronouncement by the Bangko Sentral ng Pilipinas (BSP) for a possible interest rate hike next month.
“Maybe this is coming from the very strong pronouncement of the BSP governor last Friday…about the very strong action to taken to temper inflation expectations and bring back to the inflation path particularly next year.”
On Friday, BSP Governor Nestor A. Espenilla, Jr. said the central bank is considering another interest rate hike as early as next month to quell inflation expectations.
“Let me say that the BSP is considering strong follow-through monetary adjustment at the next meeting of the Monetary Board in August,” Mr. Espenilla said in a speech.
The central bank chief added that the sustained pressures on the peso could adversely affect inflation, although they believe the country’s fundamentals are “strong and healthy.”
The government reported earlier this month that headline inflation accelerated to a fresh five-year high of 5.2% in June, faster than the 4.6% logged the previous month as well as estimates from the BSP and the Department of Finance.
The monetary authority has already raised its rates twice this year. Rates now stand at a 3-4% range.
“The market should now take [the pronouncements of the BSP] more seriously. The market has always been saying that [the BSP] is behind the curve, but I think there is more stronger communication being made by the central bank,” Ms. De Leon said.
She added that revenues of the Bureau of the Internal Revenue and the Bureau of Customs will likely be “sustained,” which means the government is not under any pressure to borrow at high rates.
“We are now in a very good position to calibrate our borrowings given that the performance of the two agencies will allow us to be able to…not accept bids at outrageous rates if ever that would be offered by the market.”
Meanwhile, a trader said the auction results were within expectations except for the three-month papers, as the rate for the tenor declined more than expected.
“Given the good rates offered by the dealers, the Treasury decided to fully award the bids,” the trader said in a phone interview.

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