THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates continued to drop across-the-board amid strong liquidity in the market.

The Bureau of the Treasury (BTr) on Monday borrowed P20 billion as planned via T-bills as its offer was almost five times oversubscribed, with bids amounting to P93.974 billion.

Broken down, the BTr raised P5 billion as planned via the 91-day debt papers out of the total tenders worth P21.065 billion. The three-month papers fetched an average rate of 1.587%, down 6.2 basis points (bps) from the 1.649% seen during last week’s auction.

It also made a full award of the 182-day T-bills, raising P5 billion from total bids of P27.1 billion. The average yield for the six-month papers also slipped 6.3 bps to 1.687% from 1.75% previously.

For the 364-day securities, the government accepted the programmed P10 billion, with the tenor attracting bids of P45.809 billion. The one-year T-bills fetched an average rate of 1.782%, down 7.3 bps from the previous week’s 1.855%.

On Friday, rates of the 91-, 182- and 364-day debt papers stood at 1.695%, 1.735% and 1.879%, respectively, at the secondary market, based on the PHP Bloomberg Valuation Service Reference Rates.

National Treasurer Rosalia V. de Leon told reporters that yields declined further as investors want to invest in safe-haven assets like government securities, especially in short-term tenors like T-bills.

“Rates dropped because investors prefer safe havens and shorter tenor government securities,” Ms. De Leon said in a Viber message.

Meanwhile, a bond trader said via Viber that strong liquidity in the market pulled down rates further.

“Also, now most banks already lowered their deposit rates. So people are looking for safe investments but with higher rates,” the trader added.

Bangko Sentral ng Pilipinas data showed domestic liquidity or M3, the broadest measure of money supply in an economy, grew 16.6% in May to P13.7 trillion, slightly faster than the 16.2% increase in April.

However, despite faster growth in money supply, bank lending remained slow, with the rise in outstanding loans by universal and commercial banks slowing to 11.3% in May from the 12.7% logged in April.

Meanwhile, the BTr will start offering five-year retail Treasury bonds (RTBs) on Thursday to raise at least P30 billion. The retail bond offer targets small investors as the papers are deemed low-risk instruments with relatively high yields.

The upcoming retail bond issue will be the government’s second one for the year and 24th overall, following its offer of three-year RTBs in February where it raised a record P310.8 billion.

“RTBs are more safe, very minimal risk since (these are) government issued. And investing in RTBs, you invest for your future and support government towards a quick recovery. That is more rewarding,” Ms. De Leon said.

She added that the exchange offer program for the RTBs, where bondholders can swap eligible papers for the new issue, is an incentive for investors as they do not have to wait for the maturity of their holdings of retail papers to invest in these fresh bonds.

The RTBs are scheduled to be offered from July 16 until Aug. 7. The BTr said it can increase the award volume and may also close the offer period earlier as needed.

The RTBs will be listed on the Philippine Dealing and Exchange Corp. (PDEx).

The Treasury also opened more online channels where investors can avail of the RTBs, launching UnionBank of the Philippines, Inc.’s BONDS.PH mobile application.

The government has set a P205-billion borrowing program for July and will offer P145 billion in T-bills via weekly auctions and P60 billion in Treasury bonds to be auctioned off every other week.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 8.4% of gross domestic product this year. — B.M. Laforga