THE GOVERNMENT made a full award of the Treasury bills (T-bills) auctioned off on Monday despite a slight uptick in yields as investors await the central bank’s rate decision.

The Bureau of the Treasury (BTr) borrowed the programmed P20 billion in T-bills yesterday as the offer was more than thrice oversubscribed, with tenders reaching P63.306 billion.

The BTr also opened the tap facility to offer an additional P5 billion in one-year securities to accommodate excess demand.

Broken down, the Treasury raised P5 billion as planned via the 91-day debt papers from bids worth P17.542 billion. The three-month papers fetched an average rate of 1.118%, up by 0.5 basis point (bp) from the 1.113% seen in last week’s auction.

It also made a full P5-billion award of the 182-day T-bills it offered out of P15.02 billion in bids. The average rate of the six-month papers likewise inched up to 1.388% from 1.386% previously.

For the 364-day securities, the BTr fully awarded the programmed P10 billion as tenders hit P30.744 billion. The one-year papers were quoted at an average rate of 1.745%, down 0.1 bp from the previous rate of 1.746%.

The further movement of rates will depend on the result of the upcoming rate-setting meeting “because the Monetary Board (MB) still has room to lower policy rates,” National Treasurer Rosalia V. de Leon told reporters in a Viber message.

“[There are] P118-billion maturities (that) need reinvestment outlets. Rates are plateauing as MB is seen to leave rates unchanged,” she added.

A bond trader said yesterday’s auction showed there is still “decent demand” for the short-tenored government securities as investors need these safe-haven assets for liquidity management.

“It seems that a further downward [movement in yields] will have to wait for a new catalyst. Investors are (also) likely to extend their duration for better yield pick-up,” the trader said via Viber.

The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board will review its policy settings on Thursday. The MB in its June meeting cut policy rates by 50 bps, bringing rates on the BSP’s overnight reverse repurchase, lending and deposit facilities to record lows of 2.25%, 2.75 and 1.75%, respectively.

Eleven of 16 economists in a BusinessWorld Poll said they expect the central bank to keep rates steady after BSP Governor Benjamin E. Diokno last week signaled a pause in easing.

Mr. Diokno had said they see “no compelling reason” to cut benchmark interest rates further at the moment despite the disappointing second-quarter gross domestic product (GDP) data, noting monetary policy works with a lag.

The economy entered its first recession since 1991 after GDP shrank 16.5% in the second quarter, following the 0.7% contraction in the first three months.

Economic managers expect GDP to shrink by 4.5-6.6% this year.

The Treasury plans to raise P15 billion in 35-day T-bills on Tuesday.

The government has set a P170-billion borrowing program for August. It will auction off P110 billion in T-bills weekly and P60 billion in Treasury bonds fortnightly.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 9.6% of GDP this year. It plans to borrow around P3 trillion this year. — B.M. Laforga