THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates dropped across-the-board.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via T-bills as its offer was almost four times oversubscribed, attracting bids worth P72.467 billion.

The BTr also opened the tap facility to offer another P5 billion in one-year securities to take advantage of strong demand.

Broken down, the BTr raised P5 billion as planned via the 91-day debt papers from P23.414 billion in tenders. The three-month T-bills fetched an average rate of 1.454%, down 13.3 basis points (bps) from 1.587% seen in the auction last week.

It also made a full award of P5 billion in 182-day instruments, with total bids hitting P18.852 billion. The average rate of the six-month T-bills likewise declined by 6.2 bps to 1.625% from the 1.687% previously.

For the 364-day securities, the BTr accepted P10 billion as programmed out of tenders worth P23.414 billion. The one-year papers fetched an average rate of 1.77%, down by 1.2 bps from the 1.782% seen last week.

National Treasurer Rosalia V. de Leon told reporters via Viber after the auction they expect to see “rates stabilizing at these low levels.”

A bond trader said rates continued to decline amid strong liquidity in the market.

“(The market is) still very liquid. No other drivers here aside from liquidity,” the trader said via Viber.

The Bangko Sentral ng Pilipinas (BSP) has unleashed a series of policy measures to boost liquidity in the market as the coronavirus pandemic continues.

The Monetary Board has slashed key policy rates by 175 bps this year to record lows of 2.25%, 2.75 and 1.75% for the BSP’s overnight reverse repurchase, lending and deposit facilities, respectively.

It also trimmed the reserve requirement ratio (RRR) of big banks by 200 bps to 12% in April. The BSP is authorized to cut RRR by up to 400 bps this year.

Meanwhile, Ms. De Leon reiterated that demand for these short-term papers will remain unaffected by the ongoing retail Treasury bond (RTB) sale since their tenors cater to different investors.

“These are short term placements (and are) not affecting RTB with 5-year tenor,” she said.

She added that the “RTB sale (is) going well” but did not disclose how much has been sold so far.

The BTr is offering five-year RTBs with a coupon of 2.625% until Aug. 7 unless closed earlier.

It raised P192.71 billion from the bonds during the rate-setting auction last week, up from the P30-billion offer as total bids hit P278.572 billion.

This is the second time the government is offering RTBs this year following the issuance in February when it borrowed a record P310.8 billion from three-year retail bonds at a coupon of 4.375%.

It also opened an exchange offer program for bondholders of the RTB 10-01, FXTN 05-73, RTB 10-02 or FXTN 07-57, who want to swap their old holdings for the new RTB. The total amount of bonds eligible for swap is estimated at P321 billion.

The RTBs will be issued on Aug. 12 and are set to mature on Aug. 12, 2025.

The Treasury canceled the auction for seven-year Treasury bonds (T-bonds) scheduled on Tuesday to make way for the ongoing retail bond sale.

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 T-bonds to be auctioned off fortnightly.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 8.4-9% of gross domestic product this year. — B.M. Laforga

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