THE GOVERNMENT went with a partial award of the Treasury bills (T-bill) it offered yesterday, finding room to reject higher yields as its retail bond sale has chalked up P173 billion so far.
The Bureau of the Treasury raised just P3.939 billion out of its P20-billion program for Monday’s auction, which was made up of a partial acceptance for the six-month papers.
The Treasury’s P20-billion borrowing plan for this week was divided into P6 billion each for the 91- and 182-day tenors and P8 billion for the 364-day papers.
The partial award was made even as market players wanted to place as much as P31.802 billion under these short-term papers. The government only accepted P3.939 billion in bids out of total tenders worth P11.569 billion for the 182-day tenor, which fetched an average yield of 5.975% — a slight dip from the 5.978% rate seen during the previous exercise.
The initial bids for the six-month instruments averaged 5.988%, until the Treasury capped the rates sought by banks at 5.99%.
On the other hand, the Treasury bureau rejected the P8.893 billion offers for the three-month papers as the yields averaged 5.776%, up from the 5.733% fetched during the Feb. 18 exercise.
Some P11.34 billion in tenders for the one-year T-bills were also rejected as rates were bound to climb by 6.2 basis points to 6.114% had the government made a full award.
National Treasurer Rosalia V. De Leon said there were reasons for the government to reject the steeper bids, such as the view that inflation in February likely continued to moderate.
“The inflation trend is declining, so there’s really no room for rates to be going up,” Ms. De Leon told reporters.
“Then of course, we see even the strong outturn for the RTB (retail Treasury bonds). There’s really reason for us to reject the 91 and 364-day and partially accept the 182-day (bids).”
The government’s offer of five-year RTBs has fetched P173 billion as of March 1, with a week left for investors to purchase the instruments for as low as P5,000.
Meanwhile, inflation is broadly expected to maintain its decline for the fourth straight month. A BusinessWorld poll yielded a median estimate of 4.1% for February’s headline print, down from 4.4% the previous month.
A bond trader added that market appetite is currently for the RTBs, giving the government “room to reject” higher T-bill rates.
The trader added that this week’s auction results were expected, as the market sees bids for the retail papers swelling to P200 billion by the end of the week.
On the other hand, Ms. De Leon said authorities are eyeing to issue a fresh set of panda or renminbi-denominated bonds within the second quarter, and another samurai or yen bonds for Japanese investors possibly by the succeeding quarter.
In 2018, the state raised $1.5 billion from their panda bond float in March and $1.39 billion from the samurai notes opened in August. These usually follow a 12-month cycle, Ms. De Leon added.
A non-deal road show in Beijing and three other cities in China is scheduled later this month. This follows a Philippine economic briefing hosted by economic managers in Osaka, Japan last February. — Melissa Luz T. Lopez