By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT made another full award of the Treasury bills (T-bill) it auctioned off on Monday as rates slipped across all tenors following further policy tightening by the central bank.
The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday. Demand from investors totalled P49.4 billion, climbing slightly from the P46.4 billion recorded at last week’s offering and was the highest this year, the Treasury said.
Broken down, the government borrowed P4 billion as planned via the 91-day tenor yesterday as tenders by investors amounted to P11.665 billion. The average rate on the papers slid 4.6 basis points (bp) to 3.244% from the 3.29% logged in the previous auction.
The Treasury also made a full award of the 182-day papers, accepting the programmed P5 billion out of total offers amounting to P20.91 billion. The average yield declined 6.9 bps to 4.117% from last week’s 4.186%.
For the 364-day T-bills, the BTr borrowed P6 billion as planned out of the P16.831 billion offered by banks and other financial institutions. The average rate likewise slipped slightly by 0.7 bp to 4.892% from the 4.899% quoted in the previous offering.
At the secondary market prior to the auction, three-month and six-month papers were quoted at 3.6379% and 4.375%, respectively, while one-year securities fetched a 4.843% yield.
At the close of the trading on Monday, all T-bill tenors rallied to fetch lower rates. The 91-day paper finished the day at 3.2268%, the 182-day T-bill at 4.0973%, and the 364-day securities at 4.8081%.
In a statement, the Treasury said it saw good demand as rates settled below those quoted at the previous auction.
“[We saw healthy market demand] after the 50-bp hike,” National Treasurer Rosalia V. De Leon told reporters on Monday.
The Bangko Sentral ng Pilipinas (BSP) raised policy rates by 50 bps last Thursday, the third consecutive tightening move this year, to temper inflation expectations.
Rates now stand at 4.5% for the overnight lending rate, 4% for the overnight reverse repurchase rate, and 3.5% for the overnight deposit rate.
BSP Governor Nestor A. Espenilla, Jr. said latest baseline forecasts, as noted by the Monetary Board, have shifted higher over the policy horizon, indicating some risk of inflation exceeding the target in 2019, prompting the central bank to raise its policy rates anew.
“At least there is no uncertainty about further rate hike by the BSP. So more or less, there’s a calming effect right now in the market,” Ms. De Leon said.
“There are also maturities because we have about P86-87 billion for Aug. 20, so there is a lot of liquidity in the system,” she added.
Meanwhile, a trader said yesterday’s auction result was expected as investor demand remains skewed towards the short end of the curve.
“As expected, the rates moved sideways with some downward bias as we see demand on the short end coming from the recent economic data we saw last week such as the slower-than-expected [gross domestic product] growth as well as the rate hike,” the trader said on Monday.
“Since the bids were attractive and there was strong demand on the short end, they opted to fully award the bills.”
The Treasury is set to raise P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

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