THE GOVERNMENT upsized its award of Treasury bills (T-bills) on Monday due to strong demand following central bank’s remarks on further monetary easing and the Treasury’s announcement of a dollar bond issue.
The Bureau of the Treasury (BTr) raised P24 billion via T-bills yesterday, larger than its initial plan to raise P20 billion, after total bids reached P91.1 billion or more than four times the original offer.
The BTr also opened its tap facility for another P10-billion offer of 364-day T-bills to accommodate strong demand.
Broken down, it upsized its award of the 91-day papers to P7 billion from the original P5-billion plan after total tenders hit P29.133 billion. Average rate for the three-month papers dropped 49.6 basis points (bps) to 2.617% from the 3.113% fetched in the auction on April 20.
The government also raised P7 billion via the 182-day T-bills, up from the original program of P5 billion, out of total bids worth P27.576 billion. The six-month papers yielded an average rate of 2.831%, down 40.8 bps from 3.239% previously.
For the 364-day T-bills, it made a full award of the P10-billion offer from total tenders of P34.445 billion. The one-year papers fetched an average rate of 3.054%, lower by 24.1 bps from 3.295% previously.
Yesterday was the second time this month the BTr upsized the volume of government securities it awarded as it seeks to beef up state coffers. Last week, it also increased the T-bills it accepted to P24 billion from the initial P20-billion plan.
National Treasury Rosalia V. de Leon said they decided to increase the award as demand continued to be robust and as rates declined across-the-board.
“Market flushed with liquidity and rates dropped with reassuring statements from Gov. Ben. Additionally, NG (national government) resources augmented by ODA (official development assistance) inflows and NG announcement of issuing in dollar market,” Ms. De Leon said in a Viber message to reporters.
A bond trader also said the market “rallied on comments” from Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Monday.
In an interview with ABS-CBN News Channel (ANC), Mr. Diokno said “we’ll do anything to get us through this crisis, so that’s still in the agenda” when asked if benchmark interest rates can be trimmed further.
The BSP cut 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.
The central bank chief said they will continue to observe the banking sector as monetary policy works with a lag.
“Also, the issuance of dollar bonds (announcement) this morning led people to believe that government will first prioritize foreign debt,” the trader added.
The trader said the timing of the announcement of dollar bond issuance somewhat eased the pressure on the domestic capital market.
The government has made an announcement to return to the global bond market on Monday to issue multi-year US-denominated bonds, according to Bloomberg.
“Yes, we are out,” Ms. De Leon confirmed in a mobile phone message yesterday.
Data from the Bloomberg Terminal showed the papers to be offered are 10-year and 25-year US-denominated senior unsecured bonds. The proceeds of the fundraising activity will be used for general purposes and budgetary support.
On Tuesday, the BTr will offer P30 billion in reissued two-year Treasury bonds with a remaining life of one year and nine months. — Beatrice M. Laforga