THE GOVERNMENT hiked the volume of Treasury bills (T-bills) it borrowed on Monday as rates continued to plummet across-the-board.

The Bureau of the Treasury (BTr) on Monday raised P24 billion via T-bills out of P116.9 billion in total tenders, which was more than five times the initial offer of P20 billion.

It borrowed P7 billion through 91-day debt papers, higher than the programmed P5 billion, from bids totaling P32.657 billion. The three-month papers fetched an average rate of 1.649%, down 9.7 basis points (bps) from the 1.746% logged in the auction last week.

It also borrowed P7 billion via 182-day T-bills, more than the P5-billion plan, as the tenor attracted tenders worth P34.574 billion. The average rate for the six-month T-bills declined by 14.2 bps to 1.75% from 1.892% previously.

Meanwhile, the BTr made a full P10-billion award of 364-day papers out of bids worth P49.669 billion. The one-year instruments fetched an average rate of 1.855%, down by 12.5 bps from the 1.98% seen last week.

National Treasurer Rosalia V. de Leon told reporters that rates plunged due to the central bank’s decision to benchmark interest rates by 50 bps last month.

Benchmark rates now stand at record lows of 2.25%, 2.75 and 1.75% for the central bank’s overnight reverse repurchase, lending and deposit facilities, respectively.

The Bangko Sentral ng Pilipinas (BSP) Monetary Board has slashed key policy rates by a total of 175 bps so far this year to mitigate the impact of the coronavirus pandemic on the economy.

Ms. De Leon added the market remains awash with cash, especially now that the BTr has repaid around P38 billion in maturing debt.

“[The low rates can be] attributed to [the] 50-bps cut and strong liquidity. We have P38.35 billion maturities back to the system,” she said via Viber.

Meanwhile, a bond trader said the market remains liquid due to dampened borrowing activity as firms are postponing plans to expand their businesses due to the ongoing pandemic.

“[There’s] just too much liquidity at the moment as a result of less borrowing activity by corporates and companies deferring their expansion plans,” the trader said.

Latest BSP data showed bank lending growth in April slowed to 12.7% from 13.6% in March, which was attributed to slower economic activity due to the lockdown.

On Tuesday, the BTr will offer P30 billion in fresh 10-year Treasury bonds (T-bonds).

The government has set a P205-billion borrowing program for July and will offer P145 billion in T-bills via weekly auctions and P60 billion in T-bonds to be auctioned off every other week.

It borrows from local and foreign lenders to plug its budget deficit seen to hit 8.4% of gross domestic product this year. — B.M. Laforga