Gov’t up­sizes Trea­sury bill award as bids for 364-day pa­pers surge

Business World - - Banking & Finance - K.A.N. Vi­dal

TREA­SURY BILLS (T-bill) of­fered yes­ter­day saw strong de­mand, with the gov­ern­ment up­siz­ing its award for the long­est tenor even as it par­tially awarded the 91-day pa­pers and even open­ing its tap and over the counter (OTC) fa­cil­i­ties to ac­com­mo­date bids.

The Bureau of the Trea­sury (BTr) bor­rowed P22.405 bil­lion via the T-bills yes­ter­day, higher than its ini­tial P20-bil­lion pro­gram and the P16.72 bil­lion raised dur­ing the pre­vi­ous auc­tion of the shorter-termed debt.

Bids from mar­ket par­tic­i­pants to­talled P66.939 bil­lion, with the bulk of the de­mand go­ing to the long­est tenor, caus­ing the gov­ern­ment to award more 364-day pa­pers than orig­i­nally in­tended, which also more than filled the par­tial award it made for the 91day debt.

Bro­ken down, the Trea­sury bor­rowed just P5.205 bil­lion through the 91-day T-bills out of the pro­grammed P6 bil­lion. Its av­er­age yield de­clined 1.5 ba­sis points (bp) to 5.396% from the 5.411% fetched dur­ing the pre­vi­ous auc­tion.

The gov­ern­ment mean­while made a full award of the 182day pa­pers, ac­cept­ing P6 bil­lion as planned out of to­tal of­fers amount­ing to P17.26 bil­lion. The av­er­age rate for the pa­pers went down 27 bps to 6.154% from last week’s 6.424%.

For the 364-day se­cu­ri­ties, the gov­ern­ment bor­rowed P11.2 bil­lion, higher than the P8-bil­lion pro­gram as it dou­bled the ac­cepted non-com­pet­i­tive bids al­lowed by the Finance Depart­ment’s Or­der 141-95. De­mand from in­vestors amounted to P43.724 bil­lion.

The pa­per’s av­er­age rate like­wise slid 38.8 bps to 6.253% from the 6.641% quoted for the pre­vi­ous award.

To max­i­mize the strong de­mand, the gov­ern­ment opened a tap fa­cil­ity for the one-year pa­pers from 2 to 4 p.m. yes­ter­day to raise up to P8 bil­lion more. It was made avail­able to the 10 fi­nan­cial in­sti­tu­tions ear­lier named as mar­ket mak­ers.

On the other hand, the Trea­sury also opened the OTC sale of the 91-, 182- and 364-day in­stru­ments to gov­ern­ment-owned and -con­trolled cor­po­ra­tions.

Based on the PHP Bloomberg Val­u­a­tion Ser­vice Ref­er­ence Rates, the three-month, six­month and one-year pa­pers were quoted at 5.795%, 6.373%, and 6.647% yes­ter­day, re­spec­tively.

Na­tional Trea­surer Ros­alia V. De Leon said the gov­ern­ment re­ceived huge de­mand for the T-bills auc­tion amid liq­uid­ity in the mar­ket.

“Their cost of fund­ing right now is maybe higher if they are of­fer­ing time de­posit which is also higher, so they have to get much higher com­pen­sa­tion for the in­vest­ment,” she said yes­ter­day fol­low­ing the auc­tion.

Ms. De Leon said there is liq­uid­ity in the mar­ket as in­di­cated by the stronger lo­cal cur­rency and the rise of the stock mar­ket.

“[We’re see­ing] liq­uid­ity in the sense that af­ter Christ­mas break, they’re all com­ing back, and given the peso has been strength­en­ing,” she said. “There’s an in­flow even for the stocks. We see for­eign buy­ing also in the mar­kets. We see that there’s also de­mand from off­shore.”

Sought for com­ment, a bond trader said yes­ter­day’s auc­tion re­sults were “in line with mar­ket ex­pec­ta­tions” as the rates were down by 20-30 bps from last week’s auc­tion, adding that the “stronger peso” con­tin­ued to drive de­mand.

The peso has been strength­en­ing against the dol­lar in the past few trad­ing ses­sions amid in­creased mar­ket ap­petite for riskier cur­ren­cies.

The gov­ern­ment plans to raise P360 bil­lion this quar­ter through do­mes­tic means. Some P240 bil­lion will be bor­rowed through 12 weekly T-bill auc­tions dur­ing the three-month pe­riod, while P120-bil­lion worth of T-bonds will also be is­sued through six fort­nightly auc­tions. •

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