THE GOVERNMENT fully awarded the Treasury bills (T-bills) it auctioned off on Tuesday for low rates as investors awash with cash continued to flock to safe-haven assets.

The Bureau of the Treasury (BTr) raised P15 billion via the 35-day T-bills yesterday as programmed out of total bids worth P73.252 billion, or nearly five times as much as the offer.

The BTr also opened its tap facility for another P15-billion offer to take advantage of the low rates offered by banks.

The average rate for the 35-day papers dropped by 67.2 basis points (bps) to settle at 2.042% yesterday from the 2.714% fetched in the auction on April 21.

In a Viber message to reporters, National Treasurer Rosalia V. de Leon said rates declined as the market priced in the slower inflation rate in April, which they believe will give the Bangko Sentral ng Pilipinas (BSP) more space to bring down benchmark interest rates further.

“Full award at average of 2.042% much lower than previous auction as April inflation clocked in at 2.2% versus March of 2.5% providing more space for BSP to cut policy rates,” Ms. De Leon said.

Aside from this, Robinsons Bank Corp. peso debt trader Kevin S. Palma said investors flocking to safe-haven assets also contributed to lower rates.

“Strong demand continued to swamp the T-bill auction as dealers and investors alike put their excess funds to work and took cue from the significant drop of government securities yields in the secondary market prior the auction & from the T-bill auction results yesterday,” Mr. Palma said in a Viber message.

The Philippine Statistics Authority (PSA) reported Tuesday that headline inflation slowed to 2.2% in April from 2.5% in March as transport costs and utility expenses eased last month, which offset an uptick in prices of food items.

BSP Governor Benjamin E. Diokno has said the Monetary Board will continue to assess the effect of the policy measures it has fired off so far as they decide on their next move.

The central bank slashed interest rates by 50 bps in an off-cycle meeting on April 16 to bring down the rates on the overnight reverse repurchase, deposit and lending facilities to 2.75%, 3.25% and 2.25%, respectively.

It also injected fresh liquidity into the system as it trimmed universal and commercial banks’ reserve requirement ratio by 200 bps to 12%.

Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila Branch, said in a note the central bank may not deliver more policy rate cuts “in the near term” as Mr. Diokno hinted at a pause.

The government is planning to borrow P170 billion from the local market this month. The Treasury wants to raise P110 billion via its weekly T-bill auctions and the remaining P60 billion via Treasury bonds to be offered fortnightly.

On Monday afternoon, the BTr also raised P10 billion as it opened its tap facility for the one-year securities, adding to the P24 billion it borrowed via T-bills that same day. — Beatrice M. Laforga