Gov’t makes full award of T-bills

THE government made another full award of the Treasury bills (T-bill) it auctioned off on Monday, with the rate of the shortest tenor declining a tad, ahead of the policy meeting of the US and local central banks.
The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday, with total bids amounting to P23.549 billion, lower than the P29.28 billion tallied at last week’s offering.
Broken down, the Treasury accepted P4 billion as planned for the 91-day papers, out of the P7.65 billion offered by banks and other financial institutions. The average rate declined by 4.4 basis points (bp) to 5.35% from the 5.394% quoted in the previous offer.
The government also made a full award of the 181-day debt notes it placed on the auction block, borrowing P5 billion as planned versus total offers amounting to P8.525 billion. The average yield rose 3.9 basis points to 6.344% from last week’s 6.305%.
The BTr likewise fully awarded the 364-day bills, accepting P6 billion out of the total bids at P7.374 billion. Its average yield climbed 7.8 bps to 6.585% from the 6.507% tallied in the previous auction.
Based on the PHP Bloomberg Valuation Service Reference Rates prior to the auction, the three-month, six-month and one-year papers were quoted at 5.587%, 6.299% and 6.617%, respectively.
National Treasurer Rosalia V. De Leon said the BTr once again saw “very good” results of its auction as rates continue to narrow.
“We [saw] also that rates have also continued to narrow given the expectation that BSP (Bangko Sentral ng Pilipinas) might take a pause,” Ms. De Leon told reporters Monday.
In a BusinessWorld poll conducted last week, all but one of the 12 economists said that the central bank will take a breather and keep its benchmark rates steady as inflation is seen to go down evidenced by the most recent print.
Prices of basic goods and services grew 6% in November, slower than the nine-year high of 6.7% booked in October and September, driven by slower price increases in food and non-alcoholic beverages.
“Obviously for the BSP, it’s really more that they would be taking a pause during their last policy meeting this Thursday,” Ms. De Leon added.
The central bank’s Monetary Board has raised interest rates by a cumulative 175 bps since May, with the latest tightening last month, to rein in inflation and price expectations.
Aside from this, Ms. De Leon said market participants factored in the global growth slowdown as well as the less hawkish stance of the US Federal Reserve (Fed) regarding their policy tightening cycle.
On Friday, St. Louis Fed President James Bullard suggested that the US central bank should delay the expected rate hike until January as the current level of its rate “is about right,” reinforcing Fed Chairman Jerome Powell’s statement last month that the current federal funds rate is nearing neutral levels.
Meanwhile, a bond trader said the results of yesterday’s auction were within expectations as rates only moved sideways.
“The yield on the 91-day papers only declined a bit. Generally, it still moved sideways. It’s not really significant,” the trader said in a phone interview.
Looking ahead, she added the market may continue to see the sideways movement of the T-bill rates until yearend.
The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds. — Karl Angelo N. Vidal