THE GOVERNMENT hiked the volume of Treasury bills (T-bills) it awarded on Monday and opened its tap facility again as yields fell across the board on the back of strong investor demand.

The Bureau of the Treasury (BTr) borrowed P22 billion in T-bills on Monday, higher than the programmed P20 billion, after accepting more bids for the six-month papers from the non-competitive sector.

The auction attracted total tenders of P112.2 billion, making the offer over five times oversubscribed. This prompted the Treasury to open its tap facility to offer another P10 billion in 364-day debt.

Broken down, the Treasury raised P5 billion in 91-day T-bills as planned from P17.33 billion in bids. The three-month debt fetched an average rate of 0.969%, down 1.5 basis point (bps) from the 0.984% logged last week.

The government also accepted P7 billion in bids for the 182-day T-bills, higher than the P5-billion program, as tenders hit P31.527 billion. The average yield of the six-month papers went down by 2.5 bps to 1.323% from 1.348% a week ago.

Lastly, the Treasury made a full P10-billion award of the 364-day securities on offer, with total bids reaching P63.355 billion. The one-year instruments were quoted at an average rate of 1.542%, down 4 bps from the 1.582% seen last week.

National Treasurer Rosalia V. de Leon attributed the strong bids to huge maturities this week worth P67 billion.

“The market is overflowing with liquidity with bias on the front end of the curve,” Ms. De Leon told reporters after the auction via Viber.

A bond trader said P49.89 billion in three-year bonds matured on Monday, while another P18 billion will mature on Wednesday.

“People (are also) waiting for the February auction schedule for any indication if the government will start extending the tenor or increasing the volume,” the trader said via Viber.

Any increase in the Treasury’s borrowing program for next month would prompt the players to reposition, the trader said.

Excluding the result of the tap facility auction that was due to close later on Monday, the BTr raised P201.575 billion from the local debt market this month, backed by strong demand for government securities, especially shorter tenors, and overflowing liquidity in the market. 

This is more than the P140 billion programmed for January after the Treasury hiked its awards of T-bills and also opened its tap facility every week.

Broken down, the government sold P111.575 billion in T-bills and P90 billion in Treasury bonds (T-bonds), higher than the initial plan to just raise P80 billion via the short-term debt and P60 billion via the longer tenors.

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 the country’s gross domestic product. — Beatrice M. Laforga