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THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates declined after inflation eased last month.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P73.58 billion, almost five times the initial offer. Bids were also slightly higher than the P71.05 billion seen last week.

Broken down, the Treasury bureau raised P5 billion as planned via the 91-day securities from P23.7 billion in bids. The three-month debt paper fetched an average rate of 0.969%, down by 10.6 basis points (bps) from the 1.075% seen last week.

The BTr also borrowed P5 billion as planned from the 182-day securities it offered on Monday from P24.98 billion in tenders. The average rate of the six-month T-bill fell by 14.8 bps to 1.121% from 1.269% previously.

Lastly, the government made a full P5-billion award of the 364-day debt papers as bids reached P24.9 billion. The average yield on the one-year instrument stood at 1.468%, down by 13.2 bps from the 1.6% fetched a week earlier.

At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 1.0073%, 1.1623% and 1.5626%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters said that T-bill rates declined as inflation slowed in December 2021.

She said there is a bias towards short-term tenors and the market also has additional liquidity due to the P25 billion in government securities maturing this week.

Headline inflation in December eased to 3.6%, its lowest in a year, from the 4.2% recorded in November as food and transport costs slowed.

The December print brought the 2021 average to a three-year high of 4.5%, breaching the 2-4% target of the central bank as well as its revised 4.4% forecast.

Meanwhile, a bond trader said the decline in yields was expected given strong demand.

“Investors continue to park their funds at the front end of the curve as virus infections continue spread with Omicron still very much at large,” the trader said in a Viber message.

“The market is mainly on risk-off mode and until there’s uncertainty to go along with high liquidity in the financial system, demand for T-bills will continue to persist.”

A second trader said yields declined as investors reacted to inflation data and surging coronavirus cases.

“Aside from that, investors are also looking at the recently rejected bids during the auctions.”

On Tuesday, the BTr will offer P35 billion in reissued five-year Treasury bonds (T-bonds) with a remaining life of four years and two months.

The Treasury plans to borrow P200 billion from the domestic market this month, or P60 billion via T-bills and P140 billion from T-bonds. — Jenina P. Ibañez