THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday as yields declined across the board due to strong market liquidity and expectations of benign inflation.

The Bureau of the Treasury (BTr) raised P22 billion via the T-bills on Tuesday, more than the P20 billion on the auction block, as the offer was almost five times oversubscribed, with bids amounting to P96.727 billion.

Broken down, the BTr borrowed P5 billion as planned from the 91-day papers as tenders reached P24.987 billion. The three-month debt fetched an average rate of 1.058%, inching down by 2.1 basis points (bps) from the 1.079% logged in the previous auction.

Meanwhile, the Treasury awarded P7 billion in 182-day T-bills, more than the P5-billion program, as tenders amounted to P31.12 billion, prompting the government to accept more bids from the non-competitive sector. The six-month securities were quoted at an average rate of 1.499%, declining by 4.4 bps from 1.543% in the previous offering.

The government also awarded the programmed P10 billion in 364-day debt papers as bids reached P40.62 billion. The one-year T-bills fetched an average rate of 1.759%, lower by 3.2 bps from the 1.791% quoted at last week’s auction.

The BTr likewise opened its tap facility to borrow another P5 billion via the one-year papers as it sought to take advantage of the strong demand and low rates seen yesterday.

At the secondary market on Monday, the 91-day, 182-day and 364-day T-bills were quoted at 1.13%, 1.551% and 1.806%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon attributed the lower yields of the T-bills on offer on Tuesday to manageable inflation expectations.

“Inflation outlook remains benign, which is still within [the central bank’s] 2% to 4% projected band. There is also sustained ample liquidity and bias for shorties,” she said in a Viber message to reporters after the auction, referring to short-term debt papers.

Inflation may have picked up slightly in October due to a rise in food prices and transport costs, as well as the impact of base effects, analysts said.

A poll of 15 economists by BusinessWorld last week yielded a median estimate of 2.4%, close to the higher end of the 1.9-2.7% forecast given by the Bangko Sentral ng Pilipinas (BSP) and well within the 2-4% target this year.

If realized, the median estimate will be a tad faster than 2.3% in September and 0.9% in October 2019. The BSP’s latest average inflation forecast for this year is at 2.3%.

The Philippine Statistics Authority will release October inflation data on Thursday.

A trader said in an e-mail that the lower yields reflected the high liquidity among investors. The trader added investors are looking for debt instruments with the best rate of return as they seek investment outlets for their excess cash.

The Treasury plans to borrow at least P140 billion from the domestic market this month: P80 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond auctions.

The government wants to raise around P3 trillion this year from local and foreign lenders to help fund its budget deficit expected to hit 9.6% of the country’s gross domestic product. — KKTJ