Gov’t fully awards T-bills at mostly steady rates

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday at mostly steady rates amid strong demand for short-term debt.

The Bureau of the Treasury (BTr) raised P25 billion as planned from the T-bills it auctioned off on Monday as total bids reached P80.265 billion or more than thrice the amount on offer. This was also higher than the P73.913 billion in tenders recorded on April 22.

Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills on Monday as tenders for the tenor reached P22.025 billion. The three-month paper was quoted at an average rate of 5.546%, steady from the previous auction. Tenders accepted by the BTr carried yields of 5.494% to 5.608%.

The government likewise made a full P8-billion award of the 182-day securities as bids for the paper amounted to P29.21 billion. The average rate of the six-month T-bill was at 5.655%, 2 basis points (bps) higher than the 5.675% fetched last week, with accepted rates ranging from 5.6% to 5.684%.

Lastly, the Treasury raised P9 billion as planned via the 364-day debt papers as demand for the tenor totaled P29.03 billion. The average rate of the one-year T-bill inched down by 0.3 bp to 5.688% from 5.691% previously, with bids accepted having yields of 5.684% to 5.7%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4558%, 5.6089%, and 5.7362%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.

T-bill yields were mostly unchanged on Monday on market expectations of further rate cuts from the Bangko Sentral ng Pilipinas (BSP) this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Monetary Board this month cut benchmark interest rates by 25 bps to bring the policy rate to 5.5%, putting its easing cycle back on track after an unexpected pause in February.

The central bank has now slashed borrowing costs by a cumulative 100 bps since it kicked off its rate-cut cycle in August last year.

BSP Governor Eli M. Remolona, Jr. has said that they are considering further reductions this year in “baby steps” or increments of 25 bps. The Monetary Board’s next policy review is scheduled for June 19.

“Strong demand was seen, which is quite expected following the strong 10-year auction,” a trader added in a text message.

The government raised a total of P300 billion via its offering of new 10-year benchmark fixed-rate Treasury notes (FXTN), 10 times the initial P30-billion program, the BTr announced on Friday.

The BTr borrowed an initial P135 billion from the bonds at the rate-setting auction on April 15 and held a public offer that ended on April 23.

The notes fetched a coupon rate of 6.375%. Accepted bid yields ranged from 6% to 6.4%, resulting in an average rate of 6.286%.

The issue was listed on the Philippine Dealing & Exchange Corp.’s fixed-income board on Monday.

Mr. Ricafort added that improved market sentiment amid hopes for easing global trade tensions also led to the steady T-bill rates on Monday.

Monday’s T-bill auction was the last one for the month. The BTr raised a total of P466.46 billion from the domestic market in April, higher than the P215-billion borrowing program for the month following the 10-year FXTN issuance.

On Tuesday, the BTr will offer P30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of five years and two months.

The Treasury plans to raise P260 billion from the domestic market in May, or P100 billion via T-bills and P160 billion through T-bonds.

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