THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it offered on Monday as market players sought higher yields ahead of the US Federal Reserve’s policy meeting and the Bangko Sentral ng Pilipinas’ (BSP) maiden bond issuance.

The Bureau of the Treasury (BTr) borrowed just P12 billion out of the programmed P22 billion even as the offer was more than twice oversubscribed, with bids totaling P54.152 billion.

Broken down, the BTr accepted P7 billion as planned in the 91-day T-bills, with the tenor attracting bids worth P26.313 billion or almost four times the offer volume. The three-month papers fetched an average rate of 1.15%, down 1.7 basis points (bps) from the 1.167% logged in the previous auction.

The Treasury said it doubled accepted bids from the non-competitive sector or small investors to P4 billion. Their prices are computed on the average price of all competitive tenders from institutional investors.

The government also borrowed P5 billion as programmed via the 182-day tenor with tenders reaching P13.134 billion. The six-month securities fetched an average rate of 1.589%, higher by 7.1 bps from 1.518% previously.

On the other hand, the Treasury did not award any 364-day T-bills yesterday even as tenders reached P14.705 billion, well above its P10-billion program. Had the government made a full award, the average rate for the one-year papers would have climbed to 1.969%, 16.2 bps higher than the 1.807% fetched in the previous auction.

At the secondary market, the 91-day, 182-day and 364-day T-bills fetched yields of 1.207%, 1.518% and 1.84%, respectively, yesterday.

National Treasurer Rosalia V. de Leon said the yields fetched for the T-bills reflected investors’ anticipation of the US central bank’s policy meeting on Sept. 15-16 and the BSP’s bond offering on Friday.

She added that the Treasury rejected the bids for one-year papers as rates soared compared to prevailing yields at the secondary market.

“The BTr rejected bids for the 364-day papers as rates were higher by 16 bps, north of the previous auction, as well as secondary levels. Banks are positioning in anticipation of maiden BSP offering, as well as outcome of the Federal Reserve policy meeting this week,” Ms. De Leon told reporters via Viber after the auction.

“The banks were saying they will go for one-year debt if the BTr accepts [a] big pickup [in yields] versus the secondary levels,” Ms. De Leon added.

A trader likewise said “bids for the 364-day bills are too high and the market is probably waiting to see first how the central bank’s auction will go.

The central bank will offer 28-day securities on Friday, with the final offer volume set to be confirmed on Sept. 16.

The BSP said the auction volume for the debt papers will be small at the start, but will be gradually increased based on market response and its liquidity forecast.

The Treasury is looking to raise P160 billion from the domestic market this month: P100 billion via weekly auctions of T-bills and P60 billion via Treasury bonds to be offered fortnightly.

The government is looking to borrow around P3 trillion this year from local and foreign lenders to help fund its budget deficit expected to hit 9.6% of the country’s gross domestic product. — K.K.T. Jose

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