THE government fully awarded the Treasury bills (T-bill) it offered Monday, with rates climbing across the board, with investors expecting another monetary policy tightening from the Philippine and US central banks.
The Bureau of the Treasury (BTr) borrowed P15 billion as planned at its T-bills auction yesterday. Bids totalled P35.8 billion, up from the P32.9 billion recorded at last week’s offering.
The government borrowed P4 billion as planned via 91-day bills yesterday as tenders amounted to P9.585 billion. The average rate rose 4.2 basis points from the previous auction to 3.261%.
The Treasury also made a full award of the 182-day paper, raising P5 billion after receiving offers amounting to P13.054 billion. The average yield climbed to 4.294% from last week’s 4.235%.
The BTr also borrowed P6 billion via the 364-day T-bills. Bids offered by institutions amounted to P13.177 billion, more than double the Treasury wanted to borrow. The average rate picked up by 9.1 basis points to 4.9%.
At the secondary market prior to the auction, three-month and six-month paper were quoted at 3.2713% and 4.475%, respectively, while one-year securities fetched a 5.072% yield.
National Treasurer Rosalia V. De Leon said the Treasury opted to make a full award amid healthy demand from investors.
“We [had] a very healthy auction in terms of demand. We saw one-and-a-half to two times oversubscription,” Ms. De Leon said following the auction.
She added that the “incremental” rise in rates was expected by the bureau.
“It’s expected that they will be asking for incremental [rise in] yields given the pronouncements of the [Bangko Sentral ng Pilipinas],” Ms. De Leon added
The central bank has been signalling another rate hike during its next monetary policy meeting in August to quell inflation expectations.
“In the face of rising threats to inflation, we hiked policy rates last May and June. We are ready to follow through to secure our inflation target,” BSP Governor Nestor A. Espenilla said in a speech at a reception for the banking community on Friday.
He added that the monetary authority remains firmly committed to its primary mandate of price stability.
Meanwhile, Ms. De Leon noted that investors also factored into their bids the recent economic growth data in the US.
The US economy grew 4.1% in the second quarter, the fastest in nearly four years due to increased consumer spending and rushed soybean shipments to China ahead of the imposition of tariffs.
“That is increasing the likelihood that the Fed (US Federal Reserve) will continue its tightening,” Ms. De Leon said.
The central banks have raised rates twice this year. BSP’s benchmark rates are now at 3-4%, while Federal funds rates are currently at 1.5-1.75%.
“I hope this is the start of the plateauing of rates given that they’re now offering five-to-10-basis-point increases in rates unlike the 30-basis-point hikes before.”
Meanwhile, a trader said the auction results were within expectations.
“The demand can be seen across all tenors. However, investors might find the rates of six-month and one-year paper more attractive that is why they decided to park their rates there,” the trader said in a phone interview.
The Treasury is set to raise 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 domestic and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal

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