THE GOVERNMENT upsized the Treasury bills (T-bills) it awarded on Monday, with the tenors fetching mixed yields amid higher demand for longer-tenored investments as players adjust their portfolios before the yearend.
The Bureau of the Treasury (BTr) raised P25 billion from the T-bills it auctioned off, higher than the P22-billion plan, as the offer was almost four times oversubscribed, with totals reaching P84.87 billion. This was just a tad higher than the P84.015 billion in tenders recorded at last week’s auction.
The Auction Committee fully awarded the offering as all tenors fetched average rates that were lower than those quoted at the secondary market, the BTr said in a statement.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as total tenders for the tenor reached P28.31 billion. The three-month paper was quoted at an average rate of 4.849%, inching up by 0.7 basis point (bp) from 4.842% in the previous auction. Yields accepted were from 4.828% to 4.873%.
The government also sold the programmed P7.5 billion in 182-day securities as tenders for the tenor totaled P29.55 billion. The average rate of the one-year T-bill was flat at 4.97%. Bids awarded carried yields from 4.95% to 4.973%.
Meanwhile, the government increased its award of 364-day securities to P10.5 billion from the P7.5-billion plan as tenders hit P27.01 billion. The strong demand caused the BTr to double its acceptance of noncompetitive bids for the tenor to P6 billion, it said.
The average rate of the one-year T-bill was at 5.003%, decreasing by 1.4 bps from the 5.017% fetched last week. Accepted rates were from 4.998% to 5.013%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.8676%, 5.0032%, and 5.0852%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
“Mixed yields were probably due to low market activity this morning, as well as the lack of data catalysts this coming week. Lower overall demand may be a result of the yearend causing investors to focus more on the belly rather than purely short-term tenors,” a trader said in a text message.
The local stock market’s recent recovery could have also reduced demand for safe-haven assets such as government securities, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Treasury bill average auction yields were little changed after being slightly lower for most weeks over the past five months, after the comparable short-term PHP BVAL yields were again slightly lower week on week,” he added.
He said prospects of further rate cuts by the Bangko Sentral ng Pilipinas (BSP) have helped bring down bond yields.
Last week, BSP Governor Eli M. Remolona, Jr. said they could deliver a fifth straight 25-bp cut at the Monetary Board’s Dec. 11 meeting to help support the economy following the weak growth seen last quarter as a corruption scandal involving government infrastructure projects has weakened consumer and investor confidence.
The central bank has lowered benchmark borrowing costs by a total of 175 bps since it began its easing cycle in August 2024, with the policy rate now at an over three-year low of 4.75%.
Monday’s auction was the last for the month. The Treasury raised P167 billion from the domestic market in November, above the P158-billion plan, as it upsized its award at three T-bill offerings.
For December, the BTr is targeting to raise P101 billion from the domestic market, or P66 billion in T-bills and P35 billion in Treasury bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — A.M.C. Sy
