EconomyEditor's PickGov’t fully awards Treasury bills as rates decline

January 23, 2023
RJ JOQUICO-UNSPLASH

THE GOVERNMENT fully awarded the Treasury bills (T-bills) it auctioned off on Monday as rates inched down across the board amid strong demand from the market.

The Bureau of the Treasury (BTr) raised P15 billion as planned from the T-bills it auctioned off on Monday as bids reached P62.013 billion, more than four times the amount on offer.

Broken down, the Treasury borrowed P5 billion as programmed via the 91-day T-bills with tenders reaching P22.36 billion. The average rate of the three-month papers dropped by 3.9 basis points (bps) to 4.211% from the 4.25% quoted for the tenor last week, with accepted rates ranging from 4.2% to 4.22%.

The government also made a full P5-billion award of the 182-day securities as bids for the papers reached P19.08 billion. The six-month tenor was quoted at an average rate of 4.912%, declining by 5.5 bps from the 4.967% seen the previous week, with accepted rates ranging from 4.89% to 4.925%.

Lastly, the BTr raised the programmed P5 billion from the 364-day debt papers as demand for the tenor reached P20.573 billion. The average rate of the one-year T-bill inched down to 5.428%, 2 bps lower than the 5.448% fetched for the tenor last week. Accepted yields were from 5.393% to 5.473%.

“The Auction Committee fully awarded bids for Treasury bills (T-bills) at today’s auction. The 91-, 182-, and 364-day T-bills fetched average rates of 4.211%, 4.912% and 5.428%, respectively, all lower than previous auction results and secondary market rates,” the BTr said in a statement on Monday.

“The auction was 4.1 times oversubscribed with total bids reaching P62.0 billion. With its decision, the Committee raised the full program of P15.0 billion for the auction,” it added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message the drop in T-bill yields in Monday’s auction was consistent with the week-on-week decline in PHP Bloomberg Valuation Service (BVAL) Reference Rates.

At the secondary market before Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 4.312%, 4.9977%, and 5.4531%, respectively, based on PHP BVAL data provided by the Treasury.

A trader likewise said in a Viber message that the rates followed “the trend of government securities in the past week.”

Investors also reacted to the Bangko Sentral ng Pilipinas (BSP) chief’s recent comments on monetary policy, the trader added.

BSP Governor Felipe M. Medalla said earlier this month that the central bank is likely to raise benchmark rates by 25 or 50 bps at its meeting on Feb. 16 as it still needs to anchor inflation expectations.

Last week, Mr. Medalla said the BSP will likely end its tightening cycle with one or two more increases this quarter, which will bring its key rate to around 6%.

The BSP hiked borrowing costs by 350 bps in 2022 in an effort to bring down elevated inflation, with its policy rate now at 5.5%.

Its first policy-setting meeting will be held on Feb. 16.

On Tuesday, the BTr will offer P35 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and seven months.

The Treasury wants to raise P200 billion from the domestic market in January, or P60 billion through T-bills and P140 billion via T-bonds.

The government borrows from domestic and external sources to finance its budget deficit, which is capped at 6.1% of gross domestic product this year. — Aaron Michael C. Sy

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