Gov’t makes full award of T-bills as rates decline

THE GOVERNMENT made a full award of the Treasury bills (T-bill) it auctioned off on Monday, with yields ending mixed following the release of its second-quarter domestic borrowing schedule.

The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday, with total bids amounting to P25.741 billion.

Broken down, the government borrowed P4 billion as programmed via the 91-day tenor yesterday as bids amounted to P8.808 billion. The average rate declined 15.2 basis points (bp) to 5.635% from the 5.787% logged in the previous auction.

The Treasury also made a full award of the 182-day papers as it accepted P5 billion as planned out of offers totalling P6.772 billion. The average yield, meanwhile, rose 3.1 bps to 5.958% from last week’s 5.927%.

For the 364-day T-bills, the BTr borrowed the programmed P6 billion out of the P10.161 billion tendered by banks and other financial institutions. Its average yield slid 8.3 bps to 5.961%% from the 6.044% tallied in the previous offering.

Following the auction, National Treasurer Rosalia V. De Leon said the Treasury saw a decline in yields after it trimmed the auction volume of the T-bills.

“Even for the short end of the curve, we saw also the decline in terms of the rates given the Treasury based on our second-quarter issuance program for the bills,” Ms. De Leon told reporters yesterday.

“The volume has been trimmed to P15 billion per auction from the P20 billion that we had in the first quarter. Supply has been reduced so that it eases in terms of the rate for the Treasury bills.”

The government plans to borrow P315 billion from the domestic market this quarter, broken down into P195 billion in T-bills and P120 billion through Treasury bonds.

Despite the reduced volume, Ms. De Leon said market appetite continues to be on the long end given the easing inflation expectation.

“We had a full award again. We see that given the expectation of moderation in inflation for March, so the appetite continues to be on the long end,” she said.

Analysts in a BusinessWorld poll said inflation likely maintained its descent in March, yielding a median estimate of 3.5% as rice and food prices dropped further.

If realized, it would mark the fifth straight month of deceleration coming from a nine-year high of 6.7% recorded in September and October 2018 and 5.2% in the same month last year.

Inflation data for March will be released by the Philippine Statistics Authority on Friday, April 5.

Sought for comment, a trader said the auction result was within market expectations.

“In terms of the rates, wala masyadong (there were no big) changes on the 182-day and one year. Malaki pa rin ‘yung volume niya. (The volume is still big),” the trader said in a phone interview.

The government plans to borrow P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product.

PANDA BONDS
Meanwhile, Ms. De Leon said rural banks and asset management firms outside Beijing and Shanghai have expressed interest to participate in the upcoming sale of renminbi-denominated or “panda” bonds expected to be offered this quarter.

“They have also expressed eventually if the volume of our issuance will also be further bigger in terms of the volume,” Ms. De Leon said.

The country’s economic team went to China for a Philippine Economic Briefing in Beijing on March 20, followed by non-deal roadshows in Nanjing, Fuzhou, Suzhou and Xiamen to encourage Chinese businessmen to invest in the country.

In March last year, the government raised 1.46 billion RMB or about $230 million from its maiden panda bond offering, as it received overwhelming demand at 9.22 billion RMB. The three-year debt papers fetched a coupon rate of 5%.

“In terms of our registration…it’s higher than the previous issue that we have indicated of about $230 million equivalent in RMB,” she added, noting that the Treasury are looking at a tenor of between three and five years “if we upsize the issue.”

Apart from the panda bonds, the government will also look at offering yen-denominated or “samurai” bonds amounting to $1-1.5 billion in yen equivalent in the second half of the year. — Karl Angelo N. Vidal