THE GOVERNMENT fully awarded the Treasury bills (T-bills) it auctioned off on Monday as rates rose across-the-board amid expectations of steady borrowing costs for the rest of the year.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via the T-bills on Monday as the offer was more than thrice oversubscribed, with bids amounting to P72.899 billion.

Broken down, the BTr made a full P5-billion award of the 91-day debt papers out of P26.931 billion in tenders. The three-month papers fetched an average rate of 1.156%, up a tad from the 1.15% logged during last week’s auction.

It also raised P5 billion as planned via the 182-day T-bills out of total bids worth P14.007 billion. The average yield of the six-month papers inched up by 2.6 basis points (bps) to 1.615% from 1.589% previously.

For the 364-day securities, the Treasury raised the programmed P10 billion as tenders reached P31.961 billion. The one-year instruments were quoted at an average rate of 1.850%, up by 4.3 bps from the previous week’s 1.807%.

National Treasurer Rosalia V. de Leon said yields went up on market expectations of unchanged rates from the Bangko Sentral ng Pilipinas (BSP) for the rest of the year, even as demand remained strong.

“Rates for 182-day and 364-day tenors were slightly pushed up with expectations that the BSP will keep policy rates steady for the remainder of the year,” Ms. De Leon told reporters in a Viber message after the auction.

The central bank last month kept benchmark interest rates unchanged amid a benign inflation outlook and signs of economic recovery.

The policy-setting Monetary Board, at its fourth policy meeting for the year, kept the rates on the BSP’s overnight reverse repurchase, lending and deposit facilities at their record lows of 2.25%, 2.75% and 1.75% respectively.

Inflation eased to a three-month low of 2.4% in August, slower than 2.7% in July 2020, but faster than the 1.7% in August 2019.

This brought the year-to-date average to 2.5%, within the BSP’s 2-4% target band and slower than the 2.6% forecast for 2020.

A trader said by phone that investors still have ample cash and are seeking higher yields from the short-term securities.

Another trader said in an e-mail that the market will continue to invest funds in T-bills as investors are still waiting for stronger hints that the economy is on its way to recovery.

On Tuesday, the Treasury will auction off P30 billion worth of reissued 10-year bonds with a remaining life of nine years and nine months.

The Treasury is looking to raise P160 billion from the domestic market this month: P100 billion via weekly auctions of T-bills and P60 billion via Treasury bonds to be offered fortnightly.

The government is looking to borrow 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. — K.K.T. Jose