THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates moved sideways, with demand for safe-haven assets like state debt still strong due to the uncertain economic environment.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as the offer attracted P53.276 billion in tenders, making it 3.6 times oversubscribed.

The demand seen on Monday, however, was slightly smaller compared with the P54.855 billion in bids seen during last week’s auction.

Broken down, the BTr borrowed P5 billion as planned via the 91-day papers from P17.471 billion in tenders. The three-month debt fetched an average rate of 1.066% or 0.2 basis point (bp) higher than the 1.064% quoted in the previous week’s auction.

It also raised the programmed P5 billion from the 182-day T-bills as the tenor attracted bids worth P18.48 billion. The average yield on the six-month debt stood at 1.407%, unchanged from last week.

Lastly, the Treasury made a full P5-billion award of the 364-day securities it offered on Monday, with total bids reaching P17.325 billion. The one-year papers fetched an average rate of 1.617%, down by 0.8 bp from 1.625% previously.

National Treasurer Rosalia V. de Leon said T-bill rates have been hovering around the levels fetched at Monday’s auction following the central bank’s revision of its inflation forecasts at its policy meeting last week.

The Bangko Sentral ng Pilipinas (BSP) last week raised its inflation forecast for the year to 4.1% from 4% previously, higher than its 2-4% target, amid rising global oil prices, higher costs of other commodities and the weakening of peso against the dollar.

For 2022 and 2023, the BSP expects inflation to average 3.1%, also slightly higher than its previous 3% estimate for both years.

Headline inflation stood at 4% last month, slowing from the 4.1% increase in June but faster than the 2.7% print in July 2020. This brought the seven-month average to 4.4%.

The auction result was also supported by robust liquidity in the market, Ms. De Leon said.

Meanwhile, a bond trader said T-bill rates moved sideways due to muted demand for the short-term papers as yields remain low.

“So what we are seeing/thinking is that the investors in T-bills are purely end-user clients rolling over their maturities,” the trader said via Viber.

Demand for safe assets like government debt has stayed strong amid lingering concerns over the coronavirus pandemic, keeping rates muted. The central bank has likewise kept borrowing costs at record lows since last year to support the economy amid the crisis.

On Tuesday, the BTr will offer P35 billion in reissued 25-year Treasury bonds (T-bonds) with a remaining life of 19 years and 26 days.

The Treasury is looking to raise P200 billion from the local market this month: P60 billion via weekly offers of T-bills and P140 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — B.M. Laforga

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