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THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday as demand for safe assets remained high amid ample liquidity in the market.

The Bureau of the Treasury (BTr) borrowed P25 billion as planned via the T-bills on Monday as total tenders reached P75.844 billion, making the offer over three times oversubscribed. However, this was lower than the P83.6 billion in demand seen during last week’s offering.

Broken down, the government raised the programmed P5 billion from the 91-day debt papers as bids for the tenor reached P16.965 billion. The three-month T-bills fetched an average rate of 1.269%, down by 0.1 basis point (bp) from the 1.270% quoted last week.

The Treasury also made a full P8-billion award of the 182-day securities it offered on Monday as it received some P20.288 billion in tenders. The six-month T-bills fetched an average rate of 1.541%, inching up from the 1.54% seen at the previous auction.

Lastly, the government awarded P12 billion as planned in 364-day T-bills from P38.595 billion in tenders. The average yield of the one-year papers slipped by 1.4 bps to 1.796% from the 1.81% quoted at last week’s offering.

The Treasury opened its tap facility to raise an additional P5 billion via the one-year tenor to accommodate the strong demand for the papers.

At the secondary market, before the auction, the three-month, six-month and one-year T-bills were quoted at 1.3045%, 1.5436% and 1.8385%, respectively.

National Treasurer Rosalia V. de Leon told reporters via Viber after the auction on Monday that the BTr fully awarded the T-bills on Monday as “liquidity remains strong,” with P34 billion worth of government securities due to mature this week.

A bond trader said investors are flocking to safe-haven assets like government securities as the country’s outlook remains uncertain due to the ongoing coronavirus pandemic.

“Demand is still there on adequate liquidity, and without other investment alternative given the current situation,” the bond trader said in a separate Viber message.

The government last week slashed its growth target for this year and the next, as the renewed spike in coronavirus disease 2019 (COVID-19) cases and strict lockdown curbs hobble the economy’s recovery.

In its 179th meeting on Tuesday, the Development Budget Coordination Committee (DBCC) downgraded its gross domestic product (GDP) growth target to 6-7% from 6.5-7.5% penciled in last December 2020. However, this was still an improvement from the record 9.6% contraction in 2020.

Economic managers expect the economy to return to its pre-crisis level by next year. Next year’s GDP is expected to grow by 7-9%, lower than the previous target of 8-10%. The economy’s growth is seen to slow to 6-7% in 2023 and 2024.

The economy remained in a recession in the first quarter after contracting by 4.2%. This marked the fifth consecutive quarter of decline due to the coronavirus pandemic.

Meanwhile, the DBCC maintained a 2-4% inflation target range for this year until 2024.

Monday’s T-bill auction was the last one scheduled for May.

The BTr raised P217.4 billion from the local bond market this month, excluding the results of the tap facility offering on Monday. This breached the programmed P170 billion for the month after it upsized its award on several occasions and opened its tap facility every week.

Broken down, the Treasury raised P127.4 billion from its T-bill auctions, higher the initial plan to raise just P100 billion, while it borrowed P90 billion via the T-bonds, higher than the programmed P70 billion.

The government is looking to borrow P3 trillion this year from local and external sources to help fund its budget deficit seen to hit 8.9% of gross domestic product. — IBC