THE GOVERNMENT made a full award for the Treasury bills (T-bills) it offered on Monday at mostly higher rates as the ongoing offering of new 10-year benchmark bonds affected market demand.
The Bureau of the Treasury (BTr) raised P25 billion as planned from the T-bills it auctioned off on Monday as total bids reached P73.913 billion or nearly thrice the amount on offer. However, the demand seen was slightly below the P74.512 billion in tenders recorded on April 14.
Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills as tenders for the tenor reached P13.67 billion. The three-month paper was quoted at an average rate of 5.546%, rising by 12.4 basis points (bps) from the 5.422% seen at the previous auction. Tenders accepted by the BTr carried yields of 5.425% to 5.625%.
The government likewise made a full P8-billion award of the 182-day securities as bids for the paper amounted to P25.863 billion. The average rate of the six-month T-bill was at 5.675%, 1.8 bps higher than the 5.657% fetched last week, with accepted rates ranging from 5.62% to 5.696%.
Lastly, the Treasury raised P9 billion as planned via the 364-day debt papers as demand for the tenor totaled P34.38 billion. The average rate of the one-year T-bill slipped by 2.3 bps to 5.691% from 5.722% previously, with bids accepted having yields of 5.684% to 5.7%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4133%, 5.6308%, and 5.6841%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
“The latest Treasury bill average auction yields were mostly slightly higher amid the ongoing 10-year Treasury bond offering that could siphon off some excess peso liquidity from the financial system,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Ricafort also noted that the T-bill auction yields were higher versus comparable short-term BVAL yields, as well as the policy rate of 5.5%.
“I think the average rate for the three-month paper is bound for correction as it has been awarded below the Bangko Sentral ng Pilipinas’ overnight rate for quite some time,” a trader added.
The BTr raised an initial P135 billion from the new 10-year fixed-rate Treasury notes it auctioned off last week, more than four times the initial P30-billion offering, as tenders reached P197.3 billion.
The new 10-year bonds fetched a coupon rate of 6.375%. Accepted yields ranged from 6% to 6.4%, resulting in an average rate of 6.286%.
The public offer period for the 10-year bonds, which are targeted towards institutional investors, is scheduled to end on April 24, unless closed earlier by the government.
US inflation concerns due to the Trump administration’s tariff policies also drove up debt yields, Mr. Ricafort added.
Federal Reserve Chair Jerome H. Powell and other Fed officials last week said they believe US President Donald J. Trump’s aggressive tariffs could put them in a bind with the potential for them to push up inflation while harming overall economic growth and labor markets, Reuters reported.
The Fed, after a series of rate cuts late last year, has left its benchmark policy rate on hold in the range of 4.25% to 4.5% since December. Mr. Powell last week signaled that with uncertainty elevated about what effects will arise from the tariffs and other administration policies, he and his colleagues are in no rush to change their wait-and-see posture.
The BTr is looking to raise P215 billion from the domestic market this month, or P125 billion via Treasury bills and P90 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sywith Reuters
