91-day T-bill rate up on oversubscription

The Bureau of the Treasury (BTr) yesterday successfully sold P15 billion worth of Treasury bills (T-bills), with the market leaning toward short term securities ahead of the announcement of inflation and gross domestic product (GDP) figures, and the policy meeting of the Bangko Sentral ng Pilipinas (BSP).

During yesterday’s auction, the BTr fully awarded P4 billion worth of 91-day T-bills despite the slight increase in the offered rates.

The three-month debt papers fetched an average rate of 3.29 percent, 2.9 basis points higher than the 3.261 percent recorded in last week’s auction.

Robust demand met the auction, with total tenders reaching P11.355 billion, almost thrice the original issue size.

A total of P5 billion in 182day T-bills were also fully awarded by the auction committee at an average rate of 4.186 percent, or 10.8 basis points lower than last week’s level of 4.294 percent.

The auction was more than three times oversubscribed, with total bids amounting to P17.316 billion.

Lastly, P6 billion worth of 364-day T-bills fetched an average rate of 4.899 percent, slightly lower than the 4.9 percent recorded during last week’s auction.

Bids for the securities reached P17.712 billion, almost three times the volume of the issuance.

According to Deputy National Treasurer Erwin Sta. Ana, the result of the auction reflects the market’s preference for short-term securities. He said the market is currently cautious in anticipation of the July inflation and second quarter GDP figures and the policy meeting of the Monetary Board.

“This week is actually a big data week as you know—inflation, GDP, plus the Monetary Board policy meeting. It just goes to show that players are really playing it safe and taking a cautious stance at this stage. Hence, the more than three times oversubscription in the auction,” Sta. Ana said.

Earlier, the BSP’s Department of Economic Research said inflation would likely settle between 5.1 percent and 5.8 percent in July. The central bank also hinted of another possible rate hike during the MB meeting on Aug. 9.

Meanwhile, Sta. Ana said the BTr is expecting to go through with its planned Samurai bond issuance within the first two weeks of August.

“We are on track, the August timetable is still there. Maybe the first two weeks,” he said.

“There will be an announcement soon on the final tenors that will be issued and also the volume. We expect probably within the week or next,” he added.

Currently, Sta. Ana said the BTr is already on the marketing stage of the issuance.

According to Sta. Ana, there seems to be a robust demand from the Japanese market for Philippine-issued securities across all tenors, based on the feedback received by the BTr from its deal managers.