THE GOVERNMENT made a partial award of the Treasury bills (T-bill) it auctioned off yesterday amid robust demand for the longest tenor, as it opened its tap and over the counter (OTC) facilities to accommodate more bids.
The Bureau of the Treasury raised P16.347 billion out of the programmed P20 billion at its auction on Monday, lower than the P22.405 billion raised a week ago.
The BTr opted to partially award the instruments even as tendered bids amounted to P51.404 billion, more than twice the amount it intended to raise. However, yesterday’s total offers were lower than the P66.939 billion fetched during the previous T-bills auction.
Broken down, the BTr borrowed just P2.347 billion out of the P6 billion the government wanted to raise via the 91-day debt. Total offers stood at just P3.16 billion, fetching an average rate of 5.418%, 2.2 basis points (bp) higher than the 5.396% last week.
Had the government accepted all tenders, the papers would have fetched an average rate of 5.66%, up 26.4 bps from the previous offer.
Meanwhile, the Treasury made a full award of the 181-day debt notes on offer, borrowing P6 billion as planned versus total offers amounting to P12.037 billion. The average yield declined 24 bps to 5.914% from last week’s 6.154%.
The government likewise fully awarded the 364-day bills, accepting P8 billion out of the total bids worth P36.207 billion. Its average yield also slid by 28.4 bps to 5.969% from the 6.253% tallied in the previous auction.
Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.698%, 6.124%, and 6.255% yesterday, respectively.
To maximize the strong demand, the government opened a tap facility for the one-year papers from 2 to 4 p.m. yesterday to raise up to P8 billion more. It was made available to the 10 financial institutions earlier named as market makers.
On the other hand, the Treasury also opened the OTC sale of the 91-, 182- and 364-day instruments to government-owned and -controlled corporations.
Sought for comment, Deputy Treasurer Erwin D. Sta. Ana said the Treasury saw a good turnout during yesterday’s auction as it saw tenders totalling P51 billion.
“We have opened the tap [facility] for the 364[-day bills]. Obviously, [given that we saw] P36 billion in total tenders, there’s really excess demand on the 364[-day tenor],” Mr. Sta. Ana told reporters yesterday.
He added that the interest rates should stabilize in the near term given that market players are pricing in the steady increase in commodity prices.
“It (interest rate) normally follows the inflation trajectory. So given that the market is factoring in stabilized inflation in the near term or maybe until next year, we would expect interest rates to behave the same.”
“As you know we aim to raise…a sizeable amount of domestic borrowings given our target mix. So we see that there’s liquidity now in the secondary market. Trading volume is up so it’s just riding that opportune window,” Mr. Sta. Ana added.
Meanwhile, a trader said the auction was within market expectations, as longer tenors continue to receive the bulk of the bids.
“Right now, there’s demand in the T-bills, but since its rates significantly dropped from the start of the year, we might see some resistance going forward. The rates might only move sideways in the subsequent auctions,” the trader said in a phone interview. — Karl Angelo N. Vidal

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