‘Overflowing’ cash continues to flock into govt securities

THE Bureau of the Treasury raised P22 billion in Treasury Bills (T-bills) on Monday’s auction as the market was flushed with “overflowing” liquidity.

The auction was oversubscribed by more than 5.6-times the initial P20-billion offering with total tenders reaching P112.2 billion, prompting the auction committee to double the accepted non-competitive bids for the 182-day T-bills to P4 billion.

National Treasurer Rosalia V. De Leon attributed the strong liquidity in the market to P67-billion maturing debt papers this week.

“Market overf lowing with liquidity with bias on front end of curve,” De Leon told reporters after the auction.

De Leon added they also decided to open the tap facility auction also last Monday for an additional P10 billion offering for 364-day T-bills.

Average rates across all tenors also ended up lower than the rates from the previous auction as well as secondary market benchmark rates.

The 91-day T-bills settled at an average rate of 0.969 percent, a 1.5-basis point reduction from 0.984 percent previously. Total bids for the tenor have also hit P17.33 billion, which was thrice the P5billion offer.

Meanwhile, the 182-day T-bills’ average rate dropped by 2.5 basis points to 1.323 percent from 1.348 percent in the previous auction. Bids for the security amounted to P31.527 billion, six times the equivalent of the initial P5-billion offer.

The average rate for the 364-day T-bills fell by 4 basis points to 1.542 percent compared to previous auction’s 1.582 percent.

Tenders for the tenor reached P63.355 billion, also six times as much as the P10-billion offer.

For this month, the Treasury has programmed to borrow P140 billion.

Finance officials said they expect national government debt this year to settle at 57 percent of gross domestic product (GDP) as the country aims to borrow a total of P3.03 trillion, roughly the same amount it borrowed in 2020.

Government projects the country’s debt-to-gdp ratio to reach 53.5 percent.

This is significantly higher than the state’s pre-pandemic target of 40.2 percent and the country’s actual debt-to-gdp ratio in 2019, which fell at a historic low at 39.6 percent.

Finance Secretary Carlos G. Dominguez said the projected debtto-gdp ratio of the country for last year “kept us well within the prescribed bounds of fiscal viability.”