THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday even as rates inched up ahead of the widely expected pause in monetary easing and as investors await for new catalysts.

The Bureau of the Treasury (BTr) on Tuesday raised P15 billion as planned via the 35-day T-bills. The offer was nearly twice oversubscribed with P29.313 billion in tenders.

The debt papers yielded an average rate of 1.163%, inching up by 0.6 basis point (bp) from the 1.157% fetched in the Aug. 4 auction.

This was also higher than the 1.125% quoted at the secondary market.

National Treasurer Rosalia V. de Leon said after the auction that rates moved sideways as the market expects the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) to keep its policy rates steady.

“There remains good demand with P118 billion maturities. Rates (remain) flat as the market sees (that) BSP’s decision is to hold,” Ms. De Leon told reporters via Viber.

The MB will review its policy settings on Thursday. In its June meeting, it 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 this week after BSP Governor Benjamin E. Diokno last week signaled a pause in easing.

Meanwhile, a bond trader said T-bill rates “will remain steady until the BSP bills/bond issuance or another major catalyst” emerges.

“Nothing spectacular in this (auction). Looks like investors are just rolling over their 35-day T-bills for liquidity management,” the trader said via Viber.

The BSP targets to launch its maiden securities offer this quarter as it moves to widen investor options for safe-haven assets and help with liquidity management. Mr. Diokno said in July that the central bank plans to offer small volumes of short-tenored instruments.

The trader said the slight pickup in rates of government securities may continue as investors seek to extend the tenors of their bond holdings amid the grim economic outlook.

The economy is projected to contract by 4.5-6.6% this year. Gross domestic product (GDP) slumped 16.5% in the second quarter, plunging the economy into recession.

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

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