THE GOVERNMENT made a partial award of the Treasury bills it auctioned off yesterday, rejecting some bids for the one-year papers to keep rates at level with yields at the secondary market.

The Bureau of the Treasury (BTr) borrowed P13.01 billion out of the programmed P15 billion at its T-bills auction Monday. Bids from market players reached P29.257 billion, nearly double the amount the Treasury intended to raise.

Broken down, the Treasury borrowed P4 billion as planned via the 92-day tenor yesterday as tenders reached P9.85 billion. The average rate declined 4.5 basis points (bp) to 5.563% from the 5.608% tallied in the previous auction.

The government also made a full award of the 183-day T-bills, accepting the programmed amount of P5 billion, with total offers amounting to P10.947 billion. The tenor’s average yield slipped 1.8 bps to 5.978% from the 5.996% fetched last week.

Meanwhile, for the 365-day T-bills, the government borrowed just P4.01 billion out of the P6 billion it wanted to raise, even with tenders totalling P8.46 billion. The average yield on the papers picked up 3.3 bps to 6.085% from the 6.052% quoted in the previous offer.

Based on the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website, the three-month, six-month and one-year papers were quoted at 5.728%, 5.97%, and 6.133% yesterday, respectively.

The Treasury is set to settle the papers today, one day ahead of schedule, due to the May 1 non-working holiday.

Following the auction, Deputy Treasurer Erwin D. Sta. Ana said the BTr made a partial award of the T-bills to temper high rates.

“The committee just decided to keep the rates at secondary market levels. So we decided that for the one-year, we have to keep it at the current market levels,” Mr. Sta. Ana told reporters yesterday.

He added that the cost of funds for some banks prompted participants to offer bids above rates at the secondary market.

“I think there’s a little bit tightness in liquidity that is actually reported. Although, we think that given the turnout of the auction, there is still ample liquidity because of the two times bid-to-cover ratio.”

Sought for comment, a trader said the auction result was in line with market expectations.

“I think BTr is bent on upping the rates of the one-year to 6.1% level — that’s why they made a partial award on the one-year [papers],” the trader said in a phone interview.

The trader added that the Treasury has liberty to partially award the papers as it has raked in ample funds during previous offerings.

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

It is looking 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. — Karl Angelo N. Vidal

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