THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday as rates declined amid strong demand.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the 35-day T-bills on Tuesday. The offer was more than two times oversubscribed, with tenders hitting P31.725 billion.

The average rate of the 35-day papers dropped 52.7 basis points (bps) to 1.157% from the 1.684% fetched in the June 30 auction.

National Treasurer Rosalia V. de Leon told reporters that T-bill rates were pulled down by strong demand as investors continue to “park liquidity in government securities.”

Ms. De Leon said the average rate fetched for the 35-day T-bills yesterday was likely a record low.

“I would suppose (the rate is) lowest since (we) have not issued the 35-day tenor in recent years,” she said via Viber.

Short-term papers remained attractive to investors seeking to park their excess funds in safe-haven assets despite the declining rates, Kevin Palma, a peso sovereign debt trader at Robinsons Bank Corp., said via Viber.

“The 35-day offering often attracts a wide array of investors given the need to deploy some excess cash to safe haven such as this short term paper,” Mr. Palma said.

“Icing on the cake is the reinvestment demand from a maturing T-bill on August 7 that amounts to P34 billion,” he added.

The Bangko Sentral ng Pilipinas (BSP) has cut benchmark interest rates by 175 bps so far this year to cushion the impact of the ongoing pandemic on the economy. Rates on the BSP’s overnight reverse repurchase, lending and deposit facilities stand at record lows of 2.25%, 2.75 and 1.75%, respectively.

The central bank has also trimmed the reserve requirement ratios (RRR) of banks to inject more liquidity into the financial system to boost lending.

The RRR of thrift and rural banks were cut by 100 bps last month to three percent and two percent, respectively. This released an estimated P10 billion in additional liquidity into the market.

The central bank in April also trimmed the reserve requirement for universal and commercial banks by 200 bps to 12%.

The government has set a P170-billion borrowing program for August. It will auction off P110 billion in T-bills weekly and P60 billion in Treasury bonds fortnightly.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 8.4-9% of gross domestic product this year. — Beatrice M. Laforga

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