Gov’t makes full award of T-bills as rates drop on in­fla­tion out­look

Business World - - Banking & Finance -

THE GOVERN­MENT made a full award of the Trea­sury bills (T-bills) it of­fered on Mon­day as yields inched lower across-the­board on ex­pec­ta­tions of a slower in­fla­tion print last month.

The Bureau of the Trea­sury ( BTr) bor­rowed P22 bil­lion on Mon­day, big­ger than its orig­i­nal pro­gram of P20 bil­lion, as the govern­ment hiked its award of the small­est tenor to ac­com­mo­date de­mand. The of­fer­ing was over four times over­sub­scribed as bids reached P98.858 bil­lion.

Bro­ken down, the BTr bor­rowed P7 bil­lion via the 91- day pa­pers ver­sus its orig­i­nal pro­gram of P5 bil­lion as it ac­cepted more bids from small in­vestors, with to­tal bids reach­ing P25.235 bil­lion. The tenor fetched an av­er­age rate of 1.116%, down by 0.5 ba­sis point ( bp) from the 1.121% seen in the pre­vi­ous auc­tion.

The govern­ment also awarded P5 bil­lion as planned in 182-day T-bills as ten­ders for the tenor to­taled P29.164 bil­lion. The six­month pa­pers fetched an av­er­age rate of 1.6%, marginally lower than the 1.601% seen last week.

Lastly, the Trea­sury like­wise bor­rowed the pro­grammed P10 bil­lion via 364-day pa­pers as to­tal ten­ders reached P44.459 bil­lion. The one-year debt was quoted at an av­er­age rate of 1.8%, de­clin­ing by 5.8 bps from the 1.858% fetched in the pre­vi­ous of­fer­ing.

Na­tional Trea­surer Ros­alia V. de Leon said in­vestors asked for lower yields as they ex­pect in­fla­tion to have slowed fur­ther in Septem­ber.

“[There were] lower rates and high bids to cover as the in­fla­tion print in Septem­ber is ex­pected to trend lower than last month,” Ms. De Leon said in a Viber mes­sage to re­porters af­ter the auc­tion.

A trader said in a Viber mes­sage that T-bill rates fetched yes­ter­day were within mar­ket ex­pec­ta­tions fol­low­ing the cen­tral bank’s Septem­ber es­ti­mate for head­line in­fla­tion. The Bangko Sen­tral ng Pilip­inas (BSP) last week said it ex­pects Septem­ber in­fla­tion to have set­tled within 1.8% to 2.6%, within its 2-4% tar­get for the year.

A Busi­ness World poll of 16 economists held last week yielded a me­dian head­line in­fla­tion es­ti­mate of 2.3%. If re­al­ized, this will be the sec­ond con­sec­u­tive month of slower in­fla­tion fol­low­ing the 2.4% pace in Au­gust. How­ever, this is faster than the 0.9% logged in Septem­ber 2019 which was the slow­est pace since the 0.7% seen in April 2016.

The Philip­pine Sta­tis­tics Au­thor­ity will re­port Septem­ber in­fla­tion data on Oct. 6. An­other trader said in a Viber mes­sage that lower yields seen for the T-bills yes­ter­day also in­di­cated am­ple liq­uid­ity among in­vestors.

“The mar­ket right now is still very liq­uid and it’s just pru­dent to put ex­cess cash at the short end of the curve amid on­go­ing un­cer­tain­ties,” the sec­ond trader said.

On Tues­day, the BTr will auc­tion off reis­sued three-year Trea­sury bonds ( T- bonds) worth P30 bil­lion. The bonds have a re­main­ing life of two years and 11 months.

The Trea­sury is look­ing to raise P140 bil­lion from the do­mes­tic mar­ket this month: P80 bil­lion in weekly T-bill auc­tions and P60 bil­lion in fort­nightly T-bond auc­tions.

The govern­ment wants to bor­row around P3 tril­lion this year from lo­cal and for­eign lenders to help fund its bud­get deficit ex­pected to hit 9.6% of the coun­try’s gross do­mes­tic prod­uct.

BW FILE PHOTO

THE Trea­sury fully awarded the securities on of­fer as rates dropped slightly.

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