THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as yields moved sideways ahead of the central bank’s latest policy meeting.

The Bureau of the Treasury (BTr) raised the programmed P20 billion via the T-bills on Monday as bids reached P76 billion or nearly four times as much as the offered amount.

Broken down, the BTr borrowed P5 billion as planned via the 91-day debt papers from P16.218 billion in tenders. The average rate of three-month T-bills edged up by 0.7 basis point (bp) to 1.022% from the 1.015% fetched in last week’s auction.

It also accepted P5 billion as programmed in 182-day securities out of bids worth P14.84 billion. The six-month debt was quoted at 1.4%, inching up by 0.1 bp from 1.399% previously.

Lastly, the government made a full P10-billion award of the 364-day instruments as tenders hit P44.943 billion. The one-year T-bills fetched an average yield of 1.686%, down by 0.9 bp from the 1.695% quoted in the previous offering.

T-bill rates move sideways yesterday as investors stayed on the sidelines ahead of the Monetary Board’s (MB) policy meeting on Thursday, National Treasurer Rosalia V. De Leon told reporters after the auction.

“Minimal movement in rates as the market sees MB in a stay mood for Thursday policy meeting. Liquidity bountiful with more than adequate bid cover across tenors,” Ms. De Leon said via Viber on Monday.

The Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board will hold its last review for the year on Thursday, Dec. 17.

The central bank will likely keep its key policy rates at their current record low levels as it considers the recent uptick in the country’s inflation rate, according to analysts.

A BusinessWorld poll last week showed all 15 analysts do not expect the Monetary Board to go for another rate cut at its seventh and final policy meeting for the year.

The BSP unexpectedly slashed rates by 25 bps last month, citing the need to provide support amid continued uncertainty caused by new virus cases globally and the impact of a recent string of typhoons.

The central bank has lowered policy rates by 200 bps this year.

However, many analysts believe the BSP will resume its easing cycle as early as the first quarter of 2021 to help the economy bounce back as recovery prospects remain dim.

A bond trader meanwhile said the slight uptick in the average rate of the one-year T-bills could serve as a signal that investors are shifting to that tenor from the 91- and 182-day papers.

“This indicates that those who are buying T-bills may be pricing in another rate cut after six months. Overall, yields remained steady across-the-board,” the trader said via Viber on Monday.

On Tuesday, the BTr will offer P30 billion in reissued 10-year notes with a remaining life of six years and four months. The debt papers carry a coupon of 4.75%.

The Treasury plans to borrow P120 billion from domestic lenders in December: P60 billion in weekly T-bill auctions and P60 billion in fortnightly T-bond offerings.

The government wants to raise around P3 trillion this year from local and foreign lenders to help fund its budget deficit, which is expected to hit 7.6% of the country’s gross domestic product. — Beatrice M. Laforga

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