Govt makes full award of T-bills as rates decline

The Bureau of the Treasury (BTR) on Monday raised P20 billion as it fully awarded bids for Treasury bills (T-billls) on an auction marked by strong demand.

Total bids for all tenors of debt papers reached P50.6 billion, more than 2.5-times than the P20-billion offering.

To take advantage of the strong demand and lower rates for the 182day T-bills and 364 T-day T-bills, the BTR has also decided to open the tap facility for another P5 billion each for the said tenors.

National Treasurer Rosalia V. De Leon said the decline in the rates for both the 182-day T-bills and the 364-day T-bills as well as the rate for the 91-day T-bills settling within the acceptable range prompted them to fully award bids.

De Leon also attributed the strong onshore liquidity to maturing retail treasury bonds (RTBS) worth P120 billion as well as expectations monetary authorities will make good on its announcement of another cut in reserve requirement ratio (RRR) as well as on policy rate.

“Investors also now pricing in another policy rate cut as Bangko Sentral ng Pilipinas Governor [Benjamin E.] Diokno has likewise conveyed,” she said.

Investor sentimen and the expected rate cuts come at a time when the government is raising funds to cushion the impact of the coronavirus disease 2019 (Covid-19) pandemic on the economy. Finance Secretary Carlos G. Dominguez III has said the government would have to borrow about $5.7 billion to ease the impact.

When foreign loans come in to support government’s Covid-19 response, De Leon also said they expect domestic borrowings to comprise 70 percent to 72 percent of the borrowing mix. The government previously set the borrowing mix for this year at 75:25 in favor of local sources.

“We target between 70 percent to 72 percent for domestic borrowings as we see market players now participating as liquidity gets addition infusion from RRR cuts and large redemption of RTBS,” she added.

The 91-day T-bills fetched an average auction rate of 3.471 percent, higher by 5.8 basis points from the previous auction rate of 3.413 percent. Tenders for the security reached P15.48 billion, higher than the P10billion offering.

For the 182-day T-bills, the debt papers capped an average rate of 3.409 percent, sliding by 14.4 basis points from 3.553 percent in the previous auction. Bids amounted to P16.19 billion, more than three times the P5-billion offering.

Like the average rate for the 182-day T-bills, the average rate for the 364-day T-bills also declined. It settled at 3.685 percent, lower by 16.0 basis points from 3.845 percent previously.

Total tenders for the longer-term security reached P18.98 billion, way above the P5-billion offering.