Gov’t makes full award of T-bills on low yields

THE GOVERNMENT raised P15 billion from its offer of Treasury bills (T-bills) yesterday as yields stood little changed on the back overwhelming demand for the short-termed notes, which came despite an interest rate hike in the United States last week.

The Bureau of the Treasury made a full award during its Tbills auction on Monday as market players placed P52.957 billion in total bids, more than triple the amount the government wanted to sell.

As a result, rates moved lower for the three- month and sixmonth tenors, coupled with a slight increase for the yearlong term.

The government raised P6 billion under the 91-day term which received P21.679 billion in total offers. It fetched an average rate of 2.084%, lower than the 2.103% fetched during the previous Tbills auction.

The Treasury also decided to award P5 billion worth of the 182- day debt papers, as planned, as bids hit more than three times the program to reach P18.902 billion. Yields fetched also dropped to 2.421% from 2.456% logged during the June 5 offering.

The P4 billion worth of 364-day notes also went oversubscribed at P12.376 billion, which prompted the government to make a full award. However, the average rate inched slightly higher to 2.875%, up 2.5 basis points from 2.85% previously.

At the secondary market, before the auction, the three-month papers were quoted at 2.8696%, while the 182- day debt fetched 2.8016%. The yield on the oneyear T-bill was at 3.0089%.

At the close of trading, the 91day and one-year papers’ rates were unchanged, while the sixmonth T- bill rallied, fetching a lower yield of 2.3871%.

National Treasurer Rosalia V. De Leon said the “very healthy” auction results made the case for a full award, noting that investor appetite remains skewed in favor of the shorter tenors.

“They [ investors] also took a cue from what the Governor said that domestic conditions would play a bigger factor than the emerging developments in the external environments. So, we see that we have a very strong appetite and a reduced rate on our offering of the T- bills,” Ms. De Leon told reporters after the auction.

Last week, Governor Amando M. Tetangco, Jr. said the Bangko Sentral ng Pilipinas (BSP) would not have to move in sync with the US Federal Reserve even as they decided to raise rates during their June 13-14 review. Instead, the BSP will focus on domestic local developments — such as domestic inflation, liquidity, and credit growth — in setting benchmark borrowing rates here.

The BSP will review its policy stance on Thursday, where analysts expect the central bank to remain on hold.

Sought for comment, a bond trader said T- bill yields likely tracked the movement of US Treasuries, which dipped in reaction to soft economic data released last week.

“Yields for local T- bills followed suit with the US Treasury rates which were also lower despite the rate hike because economic data from the US economy also went lower,” the trader said, referring to weak consumer prices and lower retail sales in May.

“The Fed rate hike was expected and now they’re looking at the September already for supposed to be another hike, but the data remains weak... It seems it doesn’t match the Fed’s hawkish stance.”

In announcing the central bank’s decision last week, Fed chair Janet L. Yellen signalled confidence on the path of US’ economic recovery, even hinting at one more rate hike later this year as originally planned. •