T-bill rates fall as bidders swamp auction

MANILA, Philippines — Short-term government securities fetched lower rates across-the-board yesterday amid a deluge of bids that reflect strong liquidity in the market, the Bureau of the Treasury (BTr) said.

During yesterday’s auction, rates for 91-day Treasury bills (T-bills) averaged 4.453 percent, 10.2 basis points lower than the 4.555 percent recorded in the auction last week.

Total tenders reached P7.45 billion, almost twice the P4 billion offer size.

The average rate for 182-day debt papers likewise dropped by 6.7 basis points to settle at 4.856 percent from 4.923 percent the previous week.

Healthy demand met the auction with bids amounting to P17.88 billion, more than three times the P5 billion offer volume.

Likewise the 364-day T-bills fetched an average rate of 5.05 percent, 1.9 basis points down from last week’s level of 5.069 percent.

The P6 billion offering was almost thrice oversubscribed as total tenders amounted to P17.734 billion.

The lower rates prompted the auction committee to fully award all tenors for a total award size of P15 billion.

According to National Treasurer Rosalia de Leon, the results of the auction reflect the market’s appetite for government securities amid high liquidity conditions due to the cut in banks’ reserve requirement ratio (RRR).

She also said that the market is anticipating the results of the upcoming Federal Open Market Committee (FOMC) meeting this week.

“Based on expectations this month, (there will be) another 50 basis points cut in the RRR,” De Leon said.

“We’re also awaiting the results of the FOMC meeting starting tomorrow, US time. Expectation is that the Fed will maintain, but there’s also the high likelihood in the next policy meeting that they might go for (a cut) – not this one, but in the next (meeting) – given expectations of sluggish US growth and because of the escalating trade tensions,” she added.

Meanwhile, De Leon said the BTr has cancelled its auction for seven-year Treasury bonds next week, as it has opted to move the fund raising activity to the third quarter.

“We just want to add the volume of the bonds for the third quarter, so that there would be additional volume,” she said.

De Leon reiterated that the government’s domestic borrowing program for the third quarter may be lower than the previous quarters, which may affect the frequency of its auctions.

She also said that the government is set to conduct next week its non-deal roadshow (NDR) in Tokyo to inform Japanese investors of its planned samurai bond offering.

Following a meeting with key infrastructure agencies last Friday, De Leon also expressed confidence that the government would be able to catch up with its infrastructure spending plans for 2019, particularly the Department of Public Works and Highways (DPWH) and the Department of Transportation (DOTr).

“We assessed how we are doing with spending. So far, based on the reports of the DPWH and DOTr, they’ll be able to make the commitments they made during the EDC (Economic Development Cluster) meeting,” De Leon told reporters in an interview.

Earlier, the Cabinet’s EDC convened to formulate a catch-up plan for 2019, following the delay in the 2019 budget which cut government spending in the first quarter.

This includes the DPWH’s plan to spend P725 billion and the DOTr’s commitment to disburse another P78 billion for infrastructure, she said.