THE GOVERNMENT made a full award of the Treasury bills (T-bills) auctioned off on Monday as rates eased across-the-board amid strong liquidity.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned on Monday via the T-bills as the offer was thrice oversubscribed, with bids reaching P60.298 billion.

It also opened the tap facility to offer P5 billion in one-year T-bills to borrow more at the low rates offered by investors.

The BTr raised P5 billion as planned via the 91-day debt papers out of P16.935 billion in bids. The three-month papers fetched an average rate of 1.113%, down 10.8 basis points (bps) from the 1.221% logged in the auction last week.

It also made a full P5-billion award of the 182-day T-bills as total tenders hit P17.078 billion. The average rate of the six-month papers slid 6.8 bps to 1.386% from 1.454% previously.

For the 364-day securities, the Treasury fully awarded the programmed P10 billion out of bids worth P26.285 billion. The one-year instruments were quoted at an average rate of 1.746%, down 0.3 bp from the previous rate of 1.749%.

The auction was met with strong demand as investors continue to prefer short-term safe-haven assets, National Treasurer Rosalia V. de Leon said, even as the public offer of retail Treasury bonds (RTBs) just ended last week.

“Continued strong buying interest on front end of curve at lower rates amidst RTB record issuance,” Ms. De Leon told reporters via Viber on Monday.

The Treasury sold a record P516.3 billion in five-year RTBs amid strong demand boosted by online sales.

The papers carry a coupon of 2.625% per annum and will be issued on Wednesday, Aug. 12.

“Despite the BTr’s announcement of a record breaking RTB issuance in terms of volume and BSP Governor Diokno’s pronouncements of a pause in monetary easing, demand for T-bills carried on as expected,” Kevin Palma, peso sovereign debt trader of Robinsons Bank Corp., said in a Viber message.

“Same narrative from previous weeks and months that dealers and investors continue to deploy their excess cash to short-term papers while waiting for leads surrounding the pandemic,” Mr. Palma said. “The virus is still very much at large with no signs of slowing down. Until then, risk aversion will perisist which will benefit demand for government securities.”

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said in a television interview on Monday that “there is no compelling reason” for the central bank to ease benchmark interest rates further since monetary policy works with a lag.

The economy contracted by 16.5% in the second quarter, taking the first-half average to -9%. Economic managers project a 4.5% to 6.6% decline in gross domestic product (GDP) this year.

The Treasury is set to borrow P30 billion in reissued 10-year Treasury bonds (T-bonds) on Tuesday. The notes bear a coupon of 2.875% and have a remaining life of nine years and 11 months.

The government has set a P170-billion borrowing program for August. It will offer P110 billion in T-bills weekly and P60 billion in T-bonds to be auctioned off fortnightly.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 9.6% of GDP this year. It plans to borrow around P3 trillion this year. — B.M. Laforga