Gov’t makes partial T-bills award

THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it placed on the auction block yesterday, as market participants preferred to park their funds in the longer-dated instruments.
The Bureau of the Treasury (BTr) raised just P18.397 billion out of the P20 billion it wanted to borrow at yesterday’s auction of the shorter-termed securities.
Bids from investors amounted to P37.253 billion, almost twice the programmed borrowing. However, the total bids were lower than the P51.404 billion fetched during last week’s T-bills auction.
Broken down, the Treasury borrowed P4.397 billion out of the programmed P6 billion via the 90-day tenor yesterday. Tenders reached P5.807 billion, short of the amount the BTr intended to raise.
This caused the average rate for the papers to go up 11.6 basis points (bps) to 5.534% from the 5.418% fetched during the previous auction.
For the 182-day T-bills, the Treasury borrowed P6 billion as planned out of total bids worth P11.699 billion. The average yield declined 2.2 bps to 5.892% from the 5.914% fetched during the previous offer.
The government also made a full award of the 364-day papers, accepting the programmed P8 billion out of total offers amounting to P19.747 billion. The average yield also slid 2.3 bps to 5.946% from the 5.969% quoted in the previous offer.
To maximize the strong demand for the longest tenor, 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 over-the-counter sale of the 90-, 182- and 364-day instruments to tax-exempt government-owned and -controlled corporations.
Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.491%, 5.917%, and 6.052% yesterday, respectively.
Following the auction, National Treasurer Rosalia V. de Leon said the BTr continued to see investors flocking to the longer tenors, particularly the one-year papers.
“We also see lower submissions for the 91-day [T-bills] because right now, the cost of funds of the banks are still higher,” Ms. De Leon told reporters yesterday.
“They are trying to max out to make sure that they will be able to offset the higher cost of their funding because time deposits before were rising. So now, they are trying to make sure that the yields where they invest will be able to make up for the higher cost of fund of the bank.”
The official added that Treasury is set to pay about P70 billion worth of maturities on Feb. 19 on top of another P11 billion, which would add liquidity to the market.
Sought for comment, a trader said the auction ended mixed as demand for the shortest tenor was “lukewarm.”
“Generally, there’s still demand [for the T-bills] because of the relatively okay performance of the peso. We also see the central bank eager to trim down reserve requirements, which will be good for the bonds,” the trader said in a phone interview.
The government plans to raise P360 billion this quarter through domestic means. Some P240 billion will be borrowed through 12 weekly T-bill auctions during the three-month period, while P120 billion worth of T-bonds will also be issued through six fortnightly auctions.
The state wants to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the remainder will be from foreign creditors.
However, the 2019 national budget has yet to be passed by Congress and signed into law, leaving the fiscal program hanging so far. — Karl Angelo N. Vidal