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Gov’t makes full award of T-bills with offer thrice oversubscribed

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BoT treasury 062918 - Gov’t makes full award of T-bills with offer thrice oversubscribed
BW FILE PHOTO

THE GOVERNMENT raised P15 billion as planned at its auction of Treasury bills (T-bill) yesterday, with rates sliding across all tenors as investors parked their additional funds following the first cut in banks’ reserve requirement ratios (RRR) last week.

The Bureau of the Treasury (BTr) made a full award of T-bills at its auction on Monday as tenders from investors reached P49.6 billion, more than thrice the amount it wanted to raise.

Broken down, the Treasury accepted P4 billion as planned for the 92-day papers out of P9.22 billion in offers by banks and other financial institutions. The average rate declined by 15.8 basis points (bp) to 4.992% — its lowest level since October — from the 5.15% quoted in the previous auction.

The government also made a full award of the 183-day debt notes it placed on the auction block, borrowing P5 billion as planned versus total offers amounting to P15.545 billion. The average yield slipped 19 bps to 5.4% from last week’s 5.59%.

The BTr likewise fully awarded the 365-day T-bills, accepting P6 billion out of bids totalling P24.82 billion. Its average yield also slid 18.5 bps to 5.498% from the 5.683% tallied in the previous auction.

Meanwhile, at the secondary market on Monday, yields on the three-month, six-month and one-year papers closed at 5.257%, 5.528%, and 5.655%, respectively.

Following the auction, Deputy Treasurer Erwin D. Sta. Ana said the T-bills auction yesterday was a “success.”

“We came in at a much lower rate than what the market predicted through our initial pre-auction survey. It’s definitely a successful auction,” he told reporters.

“Last Friday was the initial tranche of the RRR cut. There’s obviously liquidity that flows into the system. The main investment outlet would be government securities. Hence, we see demand here,” Mr. Sta. Ana added.

The Bangko Sentral ng Pilipinas (BSP) slashed the reserve ratios of lenders by a percentage point last May 31 to 17% for universal and commercial banks, 7% for thrift banks, and 4% for rural and cooperative banks.

The Treasury added that remarks from BSP Governor Benjamin E. Diokno last week alluding to more room for policy easing also drove debt yields lower. In an interview with Bloomberg TV in Tokyo, Mr. Diokno said the central bank has “more room for monetary easing” and vowed more cuts, with the timing depending on upcoming economic developments.

Sought for comment, a bond trader said the result of the T-bills auction was lower than market expectations due to strong appetite in the short end of the curve.

“Aside from the RRR cut, market players also tracked the movement of the US Treasuries,” the trader said in a phone interview.

The Treasury plans to borrow P315 billion from the domestic market this quarter, broken down into P195 billion in T-bills and P120 billion in Treasury bonds.

The government is looking to raise P1.189 trillion this year from local and foreign sources to fund its budget deficit, which is expected to widen to as much as 3.2% of the country’s gross domestic product. — Karl Angelo N. Vidal

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