THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as the market’s flight to safety pulled yields lower across-the-board.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via the T-bills on Monday from total tenders of P76.405 billion.

The BTr also opened the tap facility to offer another P5 billion in one-year debt papers to take advantage of low yields and raise more funds.

Broken down, the Treasury made a full award of P5 billion in 91-day T-bills out of P25.51 billion in bids. The three-month papers fetched an average rate of 1.221%, down 11.4 basis points (bps) from the 1.335% logged in the auction last week.

It also raised P5 billion as planned via the 182-day papers from tenders worth P23.585 billion. The average rate of the six-month debt likewise declined by 15.1 bps to 1.454% from 1.605% previously.

For the 364-day securities, the BTr fully awarded its P10-billion offer as total bids hit P27.31 billion. The one-year instruments yielded an average rate of 1.749%, down 0.9 bp from the previous rate of 1.758%.

National Treasurer Rosalia V. de Leon said T-bill rates declined as investors awash with cash continued their flight to safe havens like government securities.

“None, with overwhelming subscription and continued fall in rates with surplus liquidity and preference for haven assets,” Ms. De Leon said when asked how the return to a stricter lockdown of Metro Manila affected yesterday’s auction.

“This, in spite of (the) RTB issue,” she said, referring to the ongoing public offer of five-year retail Treasury bonds (RTB) set to close on Friday, Aug 7.

Ms. De Leon earlier said the amount raised via the RTB sale has already exceeded the record P310.8 billion in February, when it offered the three-year retail bonds.

Rates declined since there is “ample liquidity” in the market, a bond trader said by phone on Monday, adding Malacañang’s decision to reimpose tighter restrictions in key cities fueled demand for safer assets like government securities.

President Rodrigo R. Duterte said on Sunday evening that the National Capital Region, Bulacan, Rizal, Laguna and Cavite will be placed under modified enhanced community quarantine again starting Tuesday until Aug. 18.

The decision was made after a group of health workers appealed for “breathing space” amid a recent spike in coronavirus cases. 

The trader added that the market is also awaiting upcoming economic data releases this week.

The Philippine Statistics Authority will report July inflation data on Wednesday, Aug. 5 and second-quarter GDP on Thursday, Aug. 6.

A BusinessWorld survey of 16 economists last week gave a median estimate of 2.6% inflation rate for July, faster than 2.5% in June and 2.4% in the same month in 2019.

A separate BusinessWorld poll of 17 economists expect a median contraction of 11% for second-quarter gross domestic product (GDP), a deeper slump than the 0.2% drop in the first quarter and a reversal of the 5.4% growth in the second quarter of 2019.

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

It borrows from local and foreign lenders to plug its budget deficit seen to hit 8.4-9% of gross domestic product this year. — B.M. Laforga