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Gov’t makes full award of T-bills

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FACADE of the Bureau of the Treasury headquarters. — PHOTO BY MELISSA LUZ T. LOPEZ

By Karl Angelo N. Vidal, Reporter

THE GOVERNMENT once again made a full award of the Treasury bills it offered on Monday, amid robust demand following the decision of the local and US central banks to keep interest rates steady.

The Bureau of the Treasury (BTr) raised P20 billion as planned at its auction on Monday, as tenders received amounted to P30.316 billion, well above the amount it wanted to raise, although slightly lower than the P33.657 billion in offers received a week ago.

Broken down, the Treasury accepted P6 billion as planned for the 91-day papers, out of the P7.344 billion offered by banks and other financial institutions. The average rate climbed by 6.6 basis points (bp) to 5.55% from the 5.3484% quoted in the previous offer.

The government also made a full award of the 182-day debt notes it placed on the auction block, borrowing P6 billion as planned versus total offers amounting to P11.569 billion. The average yield also rose 6.6 basis points to 5.933% from last week’s 5.867%.

The BTr likewise fully awarded the 364-day bills, accepting P8 billion out of the total bids at P11.403 billion. Its average yield climbed 5.9 bps to 5.983% from the 5.924% tallied in the previous auction.

To maximize the strong demand seen during Monday’s auction, the Treasury reopened the over-the-counter sale of the 91-, 182- and 364-day instruments. This was made available to tax-exempt government-owned and -controlled corporations from 2 to 4 p.m. yesterday.

Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.467%, 5.821%, and 5.962%, respectively.

Following the auction, National Treasurer Rosalia V. De Leon said the BTr saw a “very strong demand,” even as yields across all tenors inched up.

“We hope this would continue, this kind of auction, given the very dovish remarks coming from the Fed (US Federal Reserve), and of course the BSP (Bangko Sentral ng Pilipinas) put on hold the rates during their first policy meeting last Thursday,” Ms. De Leon told reporters on Monday.

Last month, the Fed opted to keep its borrowing costs stable, saying it will be more patient in raising interest rates amid conflicting signals on the US economy’s outlook.

On the local front, the BSP also kept its benchmark rates steady as widely expected, amid signs that inflation is on a sustained decline and with price increases to return to target soon.

Meanwhile, the national treasurer attributed the slight pickup in yields to the news that the BTr will soon sell retail Treasury bonds (RTB).

“That’s (the RTB sale) anticipated by the market given that we have a P70-billion maturity on Feb. 19. But for now, given that we still have a very strong cash position, that’s still is something that we still have to confirm whether to move ahead,” Ms. De Leon said.

She added that the Treasury will have to take into consideration a slew of factors such as market appetite, the passage of the 2019 national budget and the possible cut in bank reserve requirements, before proceeding with the sale.

Sought for comments, a trader said the rates were within expectations given that the market was being cautious on the possible RTB sale.

“The average rates were still within expectations. However, the highest bids slightly exceeded the market expectations,” the trader said.

For the first quarter, the government is planning to borrow P360 billion. Some P240 billion will be borrowed this quarter through 12 weekly T-bill auctions. On the other hand, P120 billion worth of T-bonds will also be issued through six fortnightly auctions.