Gov’t makes full award of T-bills as rates drop

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THE GOVERNMENT fully awarded the Treasury bills (T-bill) on offer yesterday, with rates slipping across all tenors as market participants await the trade meeting between the United States and China later this week.

The Bureau of the Treasury (BTr) raised P15 billion as planned via T-bills auction on Tuesday versus total offers worth P50 billion, more than thrice the amount it wanted to borrow.

Broken down, the Treasury accepted P4 billion as planned for the 91-day papers out of the P11.14 billion offered by banks and other financial institutions. The average rate slipped 6.8 basis points (bp) to 4.385% from the 4.453% quoted in the previous offer.

The government also made a full award of the 183-day debt notes it placed on the auction block, borrowing P5 billion as planned versus total offers amounting to P16.85 billion. The average yield also declined by 13.3 bps to 4.723% from last week’s 4.856%.

The BTr likewise fully awarded the 364-day bills, accepting P6 billion out of total bids worth P22.016 billion. Its average yield slid 6.4 bps to 4.986% from the 5.05% tallied in the previous auction.

At the secondary market on Tuesday, the three-month, six-month and one-year papers were quoted at 4.528%, 4.818%, and 5.016%, respectively.

Deputy Treasurer Sharon P. Almanza said the Treasury was pleased with the auction result as it was within expectations.

“There’s still wait and see (mood in the market) because, for one, there’s the talk between (US President Donald J. Trump and Chinese President Xi Jinping) during the G20 Summit,” Ms. Almanza told reporters yesterday.

Reuters reported that senior officials from Washington and Beijing spoke through telephone on Monday to discuss trade and agree to maintain communications.

The conversation was ahead of talks between the leaders of China and the US, raising hopes both countries will reach a deal after trade negotiations collapsed in May.

Ms. Almanza said market players also priced into their bids the announcement of the June inflation forecast of the Bangko Sentral ng Pilipinas (BSP) as well as the “easing mode” of the local central bank and the US Federal Reserve.

“Besides, it’s been announced that for the third quarter, it’s very likely we will be reducing the volume. That was also priced in during the auction,” she added.

National Treasurer Rosalia V. De Leon earlier said the Treasury’s programmed borrowing next quarter will be lower than April-June’s P315-billion program due to “slow” government spending earlier this year.

Sought for comment, a trader said the auction result was also within expectations amid continued strong demand from investors.

“We still saw slightly lower yields on the back of stronger peso and lower US Treasury yields due to the dovish Fed,” the trader said in a phone interview.

Meanwhile, Robinsons Bank Corp. peso debt trader Kevin S. Palma said rising chatter that the Treasury will borrow less next quarter as well as the P9.3 billion in government debt set to mature on July 26 “may have helped bolster demand for this auction.”

The government is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — Karl Angelo N. Vidal