BTr awards ₧16.7B from ₧20-B offering as mixed results mark 1st T-bills auction

THE Bureau of the Treasury (BTr) received mixed results in its first Treasury bills (T-bills) auction for the year 2019 on Monday, with the auction committee awarding P16.720 billion, from the P20-billion offering. National Treasurer Rosalia V. de Leon said that investors were looking to park their funds on longer-dated securities as expectations for inflation in the coming months would be treading downward, which prompted the full award for the 182- and 364-day tenor buckets.

“First auction [for the year], so far it’s good. So right now, investors are going into the one year, I mean longer [tenors] in terms of the [Treasury] bills, so 182- and 364-day given that expectations that inflation will continue to trend downward,” de Leon said.

The 364-day saw bids reaching P15.849 billion, prompting the auction committee to award the full offering of P8 billion at an average annual rate of 6.641 percent. This showed an incline of 5.60 basis points compared to the previous auction rate of 6.585 percent.

Tenders for the 182-day T-bill amounted to P9.166 billion, higher than the P6-billion offering, with the auction committee fully awarding the IOU at an average annual rate of 6.424 percent. This also showed an increase of 8 basis points compared to the previous auction rate of P6.344 percent.

The 91-day T-bill was the only IOU partially awarded with P2.720 billion, from the P6 billion on offer, with bids for the security being undersubscribed at P4.344 billion. The average annual rate settled at 5.411 percent, representing a growth of 8.80 basis points compared to the previous rate of 5.323 percent.

If the auction committee decided to fully award all bids at P4.344 billion, the rate would have shot up to 5.675 percent, which will entail a 35.2-basis-point increase.

“And also following the remarks of [Bangko Sentral ng Pilipinas] Deputy Governor Diwa [C. Guinigundo] about the easing of inflation in the coming months and that it will be coming back to the inflation path by second half [of the year]...by the end of the year we will be within the 2-4 percent [target]. And then, of course, there’s also some speculations that the Fed [Federal Reserve System] might also take pause given the very guarded remarks of Jerome Powell that they are listening to the markets and patiently watching also the global economy,” she added.

In line with the strong appetite for the 364-day tenor from market investors, the BTr issued on Monday a memorandum addressed to its 10 government securities eligible dealers market makers regarding its offering of the 364-day T-bill through its tap facility.

“The BTr is opening its tap facility window for the 364day T-bill auctioned January 7, 2019, for a volume of P8 billion .... Awarding of government securities sold via tap will be on a ‘pro-rata basis.’ Placements through this window shall be through the nRoSS tap module from 2 p.m. to 4 p.m. only,” the BTr memorandum said.

The 10 market makers are BDO Unibank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank Philippines, Development Bank of the Philippines, First Metro Investment Corp., Land Bank of the Philippines, Metropolitan Bank and Trust Co., Rizal Commercial Banking Corp. and Security Bank Corp.

The BTr also opened its over-the-counter window to government-owned and -controlled corporations and tax-exempt institutions for the sale of the T-bills on Monday through the issuance of another memorandum, wherein GOCCs and TEIs can submit their orders through government financial institutions for the three T-bill tenor buckets.

The Philippine Statistics Authority reported last week that the increase in commodity prices slowed to 5.1 percent in December 2018, the lowest since June 2018.