Gov’t hikes award of Treasury bills as rates drop

THE GOVERNMENT on Monday hiked its award of Treasury bills (T-bills) and even opened its tap facility as yields went down across the board on expectations of slower inflation data.

The Bureau of the Treasury (BTr) borrowed P24 billion via T-bills on Monday, higher than its P20-billion program as it accepted more bids from non-competitive investors for the three-month and six-month tenors.

The offering was over four times oversubscribed, with tenders reaching P83.638 billion.

The Treasury also opened its tap facility to offer another P10 billion in one-year securities.

Broken down, the BTr raised P7 billion via the 91-day debt papers, exceeding the P5-billion program as bids reached P19.413 billion. The average rate of the three-month T-bills stood at 0.987%, down by 3.5 basis points (bps) from the 1.022% fetched in the Dec. 14 auction.

The Treasury also accepted P7 billion in 182-day papers, more than the P5-billion plan, as tenders amounted to P21.17 billion. The six-month tenor saw its average rate go down by 3.1 bps to 1.369% from 1.4% previously.

For the 364-day securities, the government raised P10 billion as planned out of bids worth P43.055 billion. The one-year T-bills were quoted at 1.614%, down 7.2 bps from the previous average rate of 1.686%.

National Treasurer Rosalia V. de Leon said the government’s first regular auction of 2021 was met with “strong” reception from investors on expectations that inflation eased last month.

“Rates declined ahead of tomorrow’s (Jan. 5) December CPI (consumer price index) report [amid] expected easing of inflation last month,” Ms. De Leon told reporters via Viber after the auction.

She added that the auction results also reflected a liquid market, with P21 billion worth of T-bills maturing this week.

The Philippine Statistics Authority will report December and full-year 2020 inflation data on Tuesday, Jan. 5.

Headline inflation likely rose by 2.9-3.7% last month on higher prices of oil and agricultural products, the central bank said last week.

Inflation picked up by 3.3% in November, taking the year-to-date print to 2.5%, within the Bangko Sentral ng Pilipinas’ full-year target of 2-4%.

Meanwhile, a trader said yesterday’s auction results showed investors’ preference for shorter tenors amid continued uncertainties due to the coronavirus disease 2019 (COVID-19) pandemic.

“The T-bill offering started the year with a bang as reflected in the total tenders submitted. Pent-up demand was also observed after two weeks or so without primary offerings of short-term papers,” Kevin S. Palma, peso sovereign debt trader at Robinsons Bank Corp., said in a Viber message.

“For as long as the threat of COVID-19 to our economy is still apparent, demand for T-bills will linger as investors would prefer to park their funds on the short end of the curve to see how developments will play out,” Mr. Palma added.

The Treasury will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) today. The papers have a remaining life of four years and eight months and bear a coupon of 3.625%.

The BTr plans to borrow P140 billion from the local debt market this month: P80 billion via weekly auctions of T-bills and P60 billion from fortnightly T-bond offerings.

The government is looking to raise P3 trillion this year from domestic and external lenders to help fund its budget deficit seen to hit 8.9% of gross domestic product. — B.M. Laforga