THE GOVERNMENT fully awarded the 35-day Treasury bills (T-bills) it auctioned off on Tuesday as rates moved sideways.

The Bureau of the Treasury (BTr) raised P15 billion as planned via 35-day T-bills yesterday out of total tenders worth P34.39 billion or more than two times the amount on offer.

The 35-day papers fetched an average rate of 2.065%, up by 4.1 basis points (bps) from the 2.024% yield in the previous auction on May 19.

National Treasurer Rosalia V. de Leon said rates of government securities have gone down to settle within the area of the headline inflation rate as seen in previous auctions, with investors starting to look at the “intermediate part of the curve.”

“Rates to be within vicinity of inflation. We see now appetite for intermediate part of curve,” Ms. De Leon told reporters via Viber.

A bond trader said lower demand during yesterday’s auction compared to bids for longer tenors was expected as market participants are in search of higher yields.

On Monday, total bids for the offer of three-month, six-month and one-year T-bills hit P83.995 billion, making it more than four times oversubscribed.

The bond trader added that demand for the 35-day papers are lower since rates have started settling within the projected headline inflation rate.

“As we expected, the demand for this is lower compared to its longer counterparts first because of the yield, then second is the yield compared to the expected inflation number,” the trader said via Viber.

The Bangko Sentral ng Pilipinas (BSP) last week forecasted that headline inflation in May likely settled between 1.9% and 2.7%, giving a point projection of 2.3%.

The estimate range is still well within the BSP’s 2-4% target for 2020.

If realized, a 2.3% projection for May will be faster than the 2.2% logged the month prior but slower than the 3.2% recorded in the same month last year.

Latest inflation data will be reported on June 5.

On Monday, the BTr raised P26 billion in T-bills and another P10 billion in one-year securities via the tap facility.

The government plans to borrow P170 billion from the local market in June: P110 billion via weekly T-bill auctions and the remaining P60 billion in Treasury bonds to be offered fortnightly. — B.M. Laforga