THE GOVERNMENT hiked the volume of Treasury bills (T-bills) it awarded on Monday as rates dropped across-the-board on strong demand.

The Bureau of the Treasury (BTr) on Monday borrowed P24 billion via T-bills from total bids of P103.8 billion, which was five times higher than the initial P20-billion offer.

To accommodate excess demand, the BTr also opened the tap facility to offer another P5 billion in one-year papers.

Broken down, it upsized to P7 billion the volume of 91-day T-bills it awarded from the programmed P5 billion out of total bids worth P29.334 billion. The three-month papers fetched an average rate of 2.09%, down 17.9 basis points (bps) from the 2.269% seen in the previous auction last week.

It also raised P7 billion via 182-day papers, P2 billion more than the P5-billion program, as the tenor attracted bids worth P33.7 billion. Rates for the six-month papers also went down by 18.1 bps to 2.193%.

For the 364-day securities, the government made a full award of the P10 billion offer from P40.771 billion in total bids at an average rate of 2.653%, which declined 10.8 bps from 2.761% last week.

National Treasurer Rosalia V. de Leon said supportive policy moves from the Bangko Sentral ng Pilipinas (BSP) allowed yields to keep its downward trend.

“Strong reception to T-bill auction at much lower rates reflecting liquid tone of market aftermath of supportive actions of the BSP,” Ms. De Leon told reporters via Viber.

“Flight to safety continues,” she added.

The BSP Monetary Board cut benchmark rates by a total of 125 bps so far this year, with the latest reduction being a 50-bp off-cycle cut on April 16.

This brought benchmark rates to record lows of 2.75% for the overnight reverse repurchase facility and 3.25% and 2.25% for the overnight lending and deposit facilities, respectively.

BSP Governor Benjamin E. Diokno has signaled a pause in monetary easing, citing “manageable inflation environment and stable inflation expectations,” after the central bank aggressively slashed key policy rates to help cushion the blow of the coronavirus pandemic on the economy.

“Market is still very liquid. It could also be an indicator that with companies shelving expansion plans, there’s a clear lack of demand for money at the moment,” a bond trader said via Viber yesterday.

On Tuesday, the BTr will offer P15 billion in 35-day T-bills.

The government is planning to borrow P170 billion from the local market this month: P110 billion via its weekly T-bill auctions and the remaining P60 billion via Treasury bonds to be offered fortnightly. — Beatrice M. Laforga

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