THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday at mostly steady yields amid strong investor demand.
The Bureau of the Treasury (BTr) raised P25 billion as planned from the T-bills it auctioned off on Monday, as total bids reached P74.512 billion or nearly thrice the amount on offer. This was also higher than the P63.33 billion in tenders recorded on April 7.
Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills as tenders for the tenor reached P13.387 billion. The three-month paper was quoted at an average rate of 5.422%, inching up by 2.9 basis points (bps) from the 5.393% seen at the previous auction. Tenders accepted by the BTr carried yields of 5.293% to 5.522%.
The government likewise made a full P8-billion award of the 182-day securities as bids for the paper amounted to P28.525 billion. The average rate of the six-month T-bill was at 5.657%, 1.2 bps higher than the 5.645% fetched last week, with accepted rates ranging from 5.59% to 5.718%.
Lastly, the Treasury raised P9 billion as planned via the 364-day debt papers as demand for the tenor totaled P32.6 billion. The average rate of the one-year T-bill slipped by 0.4 bp to 5.722% from 5.726% previously, with bids accepted having yields of 5.672% to 5.746%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.3701%, 5.6180%, and 5.7804%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
The government fully awarded its T-bill offer as average rates fetched for all tenors were broadly steady, a trader said in a text message.
“We saw just the usual client demand supporting this portion of the curve,” the trader said.
Yields on the shorter T-bill tenors crept higher as players likely held on to their cash before the jumbo offering of new 10-year bonds on Tuesday, as well as other spending requirements, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The T-bill auction yields are now mostly slightly higher versus the comparable short-term PHP BVAL yields, except for the one-year tenor, and also mostly above the key local policy rate of 5.50%,” he said.
Volatility and inflation fears caused by growing global trade war concerns also affected the market, Mr. Ricafort added.
On Tuesday, the government will hold its price-setting auction for an offering of new 10-year fixed-rate Treasury notes (FXTN), from which it wants to raise at least P30 billion.
The public offer period for the bonds is scheduled to run until April 24, unless closed earlier. The notes can be purchased at a minimum of P10 million and in increments of P1 million thereafter.
The BTr has canceled the auction of 15-year bonds scheduled for April 22 to make way for the FXTN offering.
The Treasury said the FXTN issuance through an extended public offer period format is meant to establish a benchmark-sized security, which will enhance secondary market liquidity and price discovery of the BTr’s debt instruments.
“Additionally, as evidenced by the success of BTr’s various retail bond issuances, the extended offer period format provides more flexibility for market participants to have immediate pricing guidance on the security and more time to place orders to build robust volume,” it said in a statement.
“Coming on the heels of the highly successful $3.3-billion dual-currency and triple-tranche issuance of US dollar- and euro-denominated global bonds last February, the 10-year FTXN offering is intended to raise additional funding to support the implementation of the government’s budget priorities, including projects and programs related to agriculture, education, healthcare, and infrastructure development,” the BTr added.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy
