THE GOVERNMENT upsized its award of Treasury bills (T-bills) on Monday as yields declined across the board amid strong liquidity in the market.

The Bureau of the Treasury (BTr) borrowed P24 billion via the T-bills on Monday, bigger than its P20-billion program, as the offer was nearly six times oversubscribed, with bids amounting to P112.101 billion.

The government accepted more bids from non-competitive investors for the three-month and six-month tenors to take advantage of the lower yields fetched for these papers.

Broken down, the BTr awarded P7 billion in 91-day papers, higher than the P5-billion program, as tenders reached P33.058 billion. The three-month debt fetched an average rate of 1.024%, down by 3.4 basis points (bps) from the 1.058% seen in the previous auction.

The Treasury likewise awarded P7 billion in 182-day papers, more than the planned P5 billion, as bids amounted to P37.548 billion. The six-month T-bills were quoted at an average rate of 1.453%, 4.6 bps lower than the 1.499% logged in the previous offering.

Meanwhile, the government borrowed P10 billion as planned from the 364-day T-bills, with tenders reaching P41.495 billion. The one-year securities fetched an average rate of 1.745%, inching down by 1.4 bps from the 1.759% quoted in last week’s offering.

At the secondary market on Monday, the 91-day, 182-day and 364-day T-bills were quoted at 1.105%, 1.505% and 1.774%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon told reporters in a Viber message after the auction that the lower yields reflected “hefty liquidity” among investors on expectations of benign inflation.

Ms. De Leon added that the bigger volume of bids from investors indicated their continued preference for short-term debt papers.

Meanwhile, a trader said the auction result came as “no surprise” as the market favors T-bills over longer-tenored papers amid continued uncertainties in the country’s economic outlook.

“Investors continue to flock short-term assets while waiting for any solid developments that pertain to the pandemic and how it continues to affect lives and the economy,” the trader said in a Viber message.

The Philippine economy is expected to have declined in the third quarter, though at a slower pace than the previous three-month period amid relaxed lockdown restrictions, economists said.

A BusinessWorld poll of 19 economists yielded a median estimate of a 9.2% decline in gross domestic product (GDP) in the third quarter, easing from the downward-revised 16.9% plunge in the second quarter.

If realized, this will bring the GDP contraction in the first three quarters of 2020 to 8.9%.

The government expects the economy to shrink between 4.5% and 6.6%, or an average of 5.5%, this year.

The Philippine Statistics Authority will report third-quarter GDP data on Tuesday.

The Treasury plans to borrow P140 billion from the domestic market this month: P80 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond auctions.

It will also offer another tranche of Premyo bonds to raise at least P3 billion. The offer period is set to run from Nov. 11 to Dec. 18.

Premyo bonds are part of the government’s bid to attract more small investors to invest in government securities. Last year, the BTr raised P4.961 billion from the sale of one-year peso-denominated Premyo bonds, up from its initial offer of P3 billion.

Premyo bonds are government securities that have corresponding raffle numbers for cash and non-cash prizes, aside from earning interest. The minimum investment for the bonds stands at just P500 and can be bought in multiples. One Premyo bond is equivalent to one raffle ticket.

The government wants to raise around P3 trillion this year from local and foreign lenders to help fund its budget deficit, which is expected to hit 9.6% of the country’s gross domestic product. — K.K.T. Jose

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