MANILA, Philippines — Short-term government securities yesterday fetched lower yields across-the-board amid robust liquidity in the financial system, the peso’s appreciation, as well as lower inflationary expectations from the market, the Bureau of the Treasury (BTr) said yesterday.
During yesterday’s auction, rates for the 91-day Treasury bills (T-bills) averaged 5.396 percent, 1.5 basis points lower than the 5.411 percent registered during the previous auction after the BTr capped the accepted rates.
The P6 billion offering was slightly undersubscribed, with total tenders amounting to P5.955 billion. However, only P5.205 billion of the amount was awarded.
On the other hand, the auction committee fully awarded P6 billion worth of 182-day debt papers at an average rate of 6.154 percent, declining by 27 basis points from the 6.424 percent posted in the previous week.
Healthy demand met the auction as total tenders almost tripled to P17.26 billion.
The average rate fetched by 364-day T-bills also plunged by 38.8 basis points to 6.253 percent from 6.641 percent in the previous auction.
Investors swarmed the P8 billion offering with P43.724 billion in total tenders, prompting the BTr to increase the awarded volume to P11.2 billion.
According to National Treasurer Rosalia De Leon, the auction received overwhelming demand as funds are now returning to the financial system after the holiday break.
“There’s demand. There’s liquidity...Liquidity in the sense that after the Christmas break (funds) are returning,” De Leon said.
“Then you’re also seeing that given that peso has been strengthening, so there’s inflow. Even for the stocks we see foreign buying also in the markets, we see that there’s also demand from off-shore,” she said.
The national treasurer also cited lower inflationary expectations this year, causing banks and investors to lean into the longer-end of the curve.
Due to robust demand for the one-year securities, De Leon said the auction committee doubled the amount awarded for non-competitive bids, pursuant to Department of Finance (DOF) Order 141-95. This is why the volume awarded for 364-day T-bills rose to P11.2 billion.
“We can double the amount for the non-competitive bids…(under) Department Order 141. But it’s still a decision of the auction (committee) on whether we would. But given the very strong demand for the one-year,” she said.
Moreover, De Leon said the BTr has decided to open the over-the counter (OTC) facility to provide tax-exempt state corporations access to T-bills of all tenors.
She said the tap facility will also be opened to accept additional bids for the 364-day securities.