THE GOVERNMENT upsized the volume of Treasury bills (T-bills) it awarded on Monday on the back of strong demand and low rates across all tenors.

The Bureau of the Treasury (BTr) raised P24 billion via T-bills yesterday, higher than the programmed P20 billion after total tenders hit P99.6 billion, making the auction nearly five times oversubscribed.

Strong demand prompted the BTr to open its tap facility for another P10-billion offer of 364-day instruments.

Broken down, the BTr raised P7 billion in 91-day T-bills, P2 billion more than the original P5-billion offer, out of bids worth P24.748 billion.

The average rate for the three-month papers dropped 13.8 basis points (bps) to 2.479% from the 2.617% fetched in the previous auction last week.

The government also raised to P7 billion the volume of 182-day T-bills it awarded, with total tenders reaching P33.41 billion. The six-month papers were quoted at an average rate of 2.625%, lower by 20.6 bps from 2.831% previously.

Meanwhile, the Treasury made a full award of the P10 billion in 364-day papers it offered yesterday out of P41.77 billion in total bids. The one-year securities likewise saw its average rate decline 10.9 bps to 2.945% from 3.054% previously.

National Treasury Rosalia V. de Leon said they decided to upsize the award due to low rates driven by expectations of softer inflation and amid strong liquidity in the market.

“Lower inflation expectation with low oil prices. Influenced still by ample liquidity and cut in policy rates,” Ms. De Leon told reporters in a Viber message.

“GS (government securities) [is the] only game in town,” she added.

A BusinessWorld poll of 13 economists expect inflation to have eased last month, with a median inflation estimate of 2.1% for April. Analysts largely attributed the slower inflation rate to plunging oil prices.

This estimate is slower than the 2.5% in March and within the 1.9-2.7% estimate range given by the Bangko Sentral ng Pilipinas (BSP).

The Philippine Statistics Authority (PSA) will report official April inflation data on Tuesday, May 5.

Meanwhile, a bond trader said the results of the auction were within market expectations as strong liquidity and reassurance of further easing from the central bank have brought rates down.

“[Auction results were] within expectations, still due to liquidity and BSP reiteration of readiness to deploy policy tools in light of weak GDP (gross domestic product) and inflation forecasts,” the trader said in a Viber message.

The PSA will also report official first-quarter GDP data on Thursday, May 7.

A separate BusinessWorld poll of 11 economists showed a median GDP growth estimate of 2.9% for the first quarter. If realized, this is slower compared to the 6.7% logged in the fourth quarter of 2019 and the 5.7% print posted in the January-March period last year.

Meanwhile, BSP Governor Benjamin E. Diokno has said they will continue to monitor the coronavirus pandemic even as further monetary easing remains on the agenda.

The central bank slashed interest rates by 50 bps in an off-cycle meeting on April 16 to bring down the rates on the overnight reverse repurchase, deposit and lending facilities to 2.75%, 3.25% and 2.25%, respectively.

It also injected fresh liquidity into the system as it trimmed universal and commercial banks’ reserve requirement ratio by 200 bps to 12%.

On Tuesday, the BTr will auction off P15 billion in 35-day T-bills.

The government is planning to borrow P170 billion from the local market this month. The Treasury wants to raise P110 billion via its weekly T-bill auctions and the remaining P60 billion via Treasury bonds to be offered fortnightly. — Beatrice M. Laforga