THE GOVERNMENT on Monday increased the volume of Treasury bills (T-bills) it awarded for a fourth straight week as the papers fetched lower rates and strong demand after the Bangko Sentral ng Pilipinas (BSP) signaled more policy easing ahead.
The Bureau of the Treasury (BTr) raised P27.6 billion from the T-bills it auctioned off on Monday, higher than the P22-billion plan, as total bids reached P70.649 billion, more than thrice as much as the amount on offer but lower than the P91.06 billion in tenders seen on Jan. 28.
The oversubscription prompted the Treasury to double its acceptance of non-competitive bids for the three- and six-month papers to P5.6 billion each for the fourth consecutive T-bill auction.
Broken down, the Treasury borrowed P9.8 billion via the 91-day T-bills, higher than the programmed P7 billion, as tenders for the tenor reached P27.95 billion. The three-month paper was quoted at an average rate of 5.101%, down by 1.2 basis points (bps) from the 5.113% seen at the previous auction, with accepted rates ranging from 5.05% to 5.123%.
The government also made a P9.8-billion award of the 182-day securities, above the P7-billion plan, as bids stood at P22.35 billion. The average rate of the six-month T-bill stood at 5.477%, 1.1 bps lower than the 5.488% fetched previously. The tenders accepted by the BTr carried rates of 5.418% to 5.518.
Lastly, the Treasury raised P8 billion as planned via the 364-day debt papers as demand for the tenor totaled P20.349 billion. The average rate of the one-year debt decreased by 5.3 bps to 5.671% from 5.724% previously, with bids accepted having rates of 5.6% to 5.72%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.2786%, 5.5219%, and 5.7118%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
The government upsized its T-bill award as it saw strong demand, with the papers’ average rates declining week on week and settling below prevailing secondary market levels, the BTr said in a statement.
The T-bills fetched lower yields after BSP Governor Eli M. Remolona, Jr. said they could slash benchmark interest rates by 50 bps this year, with a cut on the table at the Monetary Board’s Feb. 13 policy meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Since Governor Remolona said they could cut rates by up to 50 bps, with the current policy rate at 5.75%, investors are trying to lock in short-term rates,” a trader said in a text message.
Mr. Remolona said the central bank may cut benchmark interest rates by 50 bps this year as “policy insurance” against risks, adding that the reductions could be implemented in increments of 25 bps each in the first and second semesters.
The Monetary Board has slashed borrowing costs by 75 bps since starting its easing cycle in August last year.
On Tuesday, the government will offer P30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of five years and five months.
The Treasury is looking to raise P203 billion from the domestic market this month, or P88 billion from T-bills and P115 billion from T-bonds. — A.M.C. Sy
