THE GOVERNMENT made a full award of the Treasury bills (T-bill) it offered on Monday as rates inched down across-the-board amid strong liquidity in the market and expectations of manageable inflation.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via the T-bills on Monday as the offer was almost four times oversubscribed, with tenders amounting to P79.908 billion.

Broken down, the BTr awarded the programmed P5 billion in 91-day papers as bids reached P20.91 billion. The three-month T-bills fetched an average rate of 1.088%, down by 2.8 basis points (bps) from the 1.116% seen in the previous auction.

The government also borrowed P5 billion as planned from the 182-day T-bills as tenders reached P24.286 billion. The six-month securities were quoted at an average rate of 1.598%, inching down 0.2 bp from the 1.6% logged in last week’s offering.

The Treasury also made a full P10-billion award of 364-day debt papers as bids climbed to P34.712 billion. The one-year T-bills fetched an average rate of 1.793%, declining by 0.7 bp from the 1.8% seen in the previous auction.

At the secondary market on Monday, yields on the three-month, six-month and one-year T-bills closed at 1.195%, 1.608%, and 1.836%, respectively.

National Treasurer Rosalia V. de Leon attributed the lower T-bill yields to the central bank’s move to keep benchmark rates steady and its lower inflation outlook.

“The central bank’s monetary stance remains accommodative and its inflation outlook continues to be benign,” Ms. De Leon told reporters in a Viber message after the auction.

The Bangko Sentral ng Pilipinas’ (BSP) left benchmark rates unchanged at its Oct. 1 policy meeting, citing easing inflation and ample liquidity in the financial system.

At its fifth policy review this year, the Monetary Board kept the rates on the BSP’s overnight reverse repurchase, lending and deposit facilities unchanged at their record lows of 2.25%, 2.75% and 1.75%, respectively.

At that meeting, the BSP said its inflation forecast for this year was revised downwards to 2.3% from the previous 2.6% estimate. It also lowered its inflation outlook for 2021 and 2022 to 2.8% (from three percent) and three percent (from 3.1%).

Inflation eased for the second straight month in September to its slowest level in four months on the back of moderating prices in the heavily weighted food and nonalcoholic beverages, the Philippine Statistics Authority (PSA) reported last week.

Preliminary PSA data showed headline inflation stood at 2.3% in September, the slowest since May’s 2.1%. This was also slower than the 2.4% seen in August, but faster than the 0.9% print in September 2019. 

Headline inflation averaged at 2.5% in the first nine months, within the BSP’s 2-4% target for the year.

Meanwhile, a trader said in an e-mail that the T-bill auction’s result came as expected as investors remain highly liquid, as shown by the oversubscription in recent auctions for government debt papers.

The Treasury is looking to raise P140 billion from the domestic market this month: P80 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond auctions.

The government wants 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