Gov’t sells P15-B T-bills at mixed yields amid policy headwinds
THE GOVERNMENT made a full award of P15 billion in Treasury bills (T-bills) yesterday as strong demand kept the rise in yields at bay.
Bids by bond traders moved sideways when compared to the auction results two weeks ago as investors await fresh leads that would provide clear direction of interest rates.
Investors wanted to lend as much as P36.602 billion, more than double the volume of debt papers placed on the auction block.
The government decided to fully award P6 billion worth of 91day T-bills as total offers reached an overwhelming P21.155 billion. These short- termed notes fetched an average rate of 2.299%, or 9.5 basis points lower than the 2.394% yield seen during the April 10 auction.
The Treasury also sold P5 billion under a 182-day term, more than half of the P9.032 billion that banks wanted to buy. Yields inched slightly higher at 2.638%, coming from the 2.608% average during the previous offering.
The P4 billion worth of 364day debt papers was also awarded yesterday from P6.415 billion in total bids, as the government awarded a higher rate for these securities. The notes came with an average 2.989% rate, rising by 4.4 basis points from 2.945% previously as banks sought for returns ranging from 2.85% to 3.1%.
Deputy Treasurer Erwin D. Sta. Ana said that the auction reflected market preference for short- term instruments, as the financial market remains awash with cash.
“Total bids amounted to more than double the amount on offer. I think the market is still pretty liquid and of course, these are shorter-dated notes so I think demand is still there from that sector,” Mr. Sta. Ana told reporters after the auction, adding that the government expected the minimal movements in rates.
Asked whether the auction results signalled stable interest rates, the Deputy Treasurer said: “We can’t say that for sure because there are so many risks and headwinds coming from external factors. Maybe the market is just waiting for further clarity on policies and other leads coming from outside.”
A bond trader said separately that the strong demand seen for the T- bills reflected investors’ wait-and-see stance, amid expectations of a faster inflation rate in the Philippines and future interest rate hikes in the United States.
“There is stronger demand for the low end because no one would risk to tie up their funds for so long,” the trader said by phone.
“Yield- wise, the perception is rates [are] going up and based on US Treasury rates, there was a big move over the weekend. With that risk, others would rather wait until the actual Fed move.”
The government raised P175 billion through its offer of threeyear retail Treasury bonds earlier this month, which supported a “healthy” cash position as the second quarter opened.
The Treasury plans to borrow up to P180 billion from the domestic market this quarter, with P90 billion each raised through Treasury bills and Treasury bonds. It secured P150.602 billion from the sale of government-issued papers during the first quarter, lower than its P180- billion program.