Gov’t hikes award of T-bills as rates drop further


THE GOVERNMENT hiked the volume of Treasury bills (T-bills) it awarded on Monday as yields declined across the board on expectations that the central bank will keep benchmark interest rates unchanged this week.

The Bureau of the Treasury (BTr) raised P30.2 billion via the T-bills on Monday, bigger than the programmed P25 billion, as the offering was almost four times oversubscribed. Total tenders reached P97.24 billion on Monday, slightly higher than the P93.9 billion in the previous week’s auction.

The BTr also opened its tap facility to offer P7 billion more in 364-day securities.

Broken down, the Treasury raised P7 billion via the 91-day T-bills, breaching the P5-billion program, as bids hit P23.172 billion. The three-month papers fetched an average rate of 1.278%, down by 2.8 basis points (bps) from the 1.306% seen last week.

It also hiked its award of 182-day debt to P11.2 billion from the programmed P8 billion after the tenor attracted P31.431 billion in tenders. The average yield on the six-month papers likewise went down by 8 bps to 1.549% from 1.629%, previously.

Lastly, the government accepted the planned P12 billion in bids for the 364-day securities, with tenders for the tenor reaching P42.636 billion. The one-year paper’s average rate stood at 1.829%, declining by 3.4 bps from the 1.863% fetched at last week’s auction.

“Strong market presence in auction with rates declining across all tenors. Markets see BSP (Bangko Sentral ng Pilipinas) providing continued anchor for economic rebound,” National Treasurer Rosalia V. de Leon told reporters via Viber after the auction on Monday.

A bond trader interviewed by phone said the BSP will likely continue to keep benchmark interest rates at their current record lows for now, especially with inflation remaining stable.

A BusinessWorld poll held last week showed 15 out of 17 analysts expect the central bank to maintain its overnight reverse repurchase rate or the key policy rate at its record low of 2%.

Analysts said the scope for interest rate adjustment is limited as inflation continued to exceed the annual target and supply issues persisted.

Inflation was steady at 4.5% for the second straight month in April, according to the Philippine Statistics Authority (PSA). However, it still marked the fourth straight month of inflation exceeding the central bank’s 2-4% annual target.

The BSP expects inflation to average at 4.2% this year from 2.6% in 2020, mainly due to supply disruptions in meat products caused by the African Swine Fever outbreak and the uptick in global oil prices.

Ms. De Leon added that the Treasury also continues to reposition its debt portfolio, with a bias for local borrowings.

The BTr wants to raise P170 billion from the local bond market this month: P100 billion via the weekly offering of T-bills and P70 billion in Treasury bonds to be auctioned off fortnightly.

The government is looking to borrow P3 trillion this year from domestic and external sources to help fund a budget deficit seen to hit 8.9% of gross domestic product. — B.M. Laforga

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