By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT fully awarded the Treasury bills (T-bill) it auctioned off on Tuesday even as rates climbed across all tenors amid strong liquidity in the market.
The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday using the new National Registry of Scripless Securities settlement system.
The offer was more than twice oversubscribed as demand from investors totalled P35.7 billion, although lower than the P43.1 billion logged at last week’s offering.
Broken down, the government made a full award of the 91-day papers, accepting P4 billion out of total tenders amounting to P8.135 billion. Its average yield climbed 1.5 basis points (bp) to 3.218% from the 3.203% tallied in the previous auction.
For the 182-day T-bills, the Treasury accepted P5 billion as planned out of the P12.525 billion offered by banks and other financial institutions. The average rate likewise rose by 0.6 bp to 4.07% from the 4.064% quoted in the previous offering.
The government also fully awarded the 364-day papers, borrowing P6 billion as planned versus the total offers totalling P15.039 billion. The average yield likewise rose by a basis point to 4.879% from last week’s 4.869%.
At the secondary market prior to the auction, three-month and six-month papers were quoted at 3.1496% and 4.18%, respectively, while one-year securities fetched a 5.0732% yield.
At the close of trading, the debt papers rallied to fetch lower rates across all tenors. The 91-day T-bills fetched 3.1471%, the 182-day papers were quoted at 4.0460% and the 364-day securities finished the session at 4.8357%.
National Treasurer Rosalia V. De Leon said the government saw “very healthy demand” at yesterday’s auction.
“The rates were 0.6-1 bp higher than the previous auction so it is aligned with our estimates according to our model. At the same time, we saw a very healthy demand also for our T-bill auction,” Ms. De Leon told reporters following the auction.
She added that there was liquidity in the market due to maturing government debt.
“Again there is a liquidity because we had a redemption of about P86 billion last Aug. 18. And then of course we have about P9 billion also maturing this week.”
Ms. De Leon noted that the hawkish stance of the US Federal Reserve regarding its gradual rate hike pace was also factored in by the market.
Fed chair Jerome Powell defended on Friday the US central bank’s stance to gradually raise rates.
Speaking at a research symposium in Jackson Hole, Wyoming, Mr. Powell said that “further gradual increases in the target range for the federal funds rate will likely be appropriate” as the economy remains strong.
Meanwhile, a trader said the auction result yesterday was within expectations as demand is still seen in the short end.
“Actually, the demand in the short end will be there for long because so far the market preference is still less than one year. Even six months below,” the trader said in a phone interview.
The Treasury is raising P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in T-bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.