T-bills fetch mixed results

MANILA, Philippines — The auction for short-term government securities fetched mixed results ahead of the Bangko Sentral ng Pilipinas’ (BSP) maiden auction for its own securities, as well as the US Federal Reserve’s policy meeting this week.

During yesterday’s auction, rates for 91-day Treasury bills (T-bills) averaged at 1.15 percent, 1.7 basis points lower than the 1.167 percent recorded last week.

The auction was more than five times oversubscribed, with total tenders amounting to P26.313 billion.

This allowed the auction committee to double the accepted non-competitive rates, bringing the total awarded volume to P7 billion instead of P5 billion.

On the other hand, the average rate for 182-day debt papers settled at 1.589 percent, 7.1 basis points up from last week’s level of 1.518 percent.

Despite this, the Bureau of Treasury (BTr) decided to fully award the P5 billion offering which attracted total bids of P13.134 billion.

Meanwhile, the auction committee decided to reject all bids for the 364-day securities as investors asked for higher rates.

Had the BTr fully awarded the P10 billion offering, rates would have averaged at 1.969 percent, 16.2 basis points higher than the 1.807 percent recorded in the previous auction a week ago.

Total tenders for the one-year T-bills amounted to P14.705 billion.

Overall, yesterday’s auction recorded P54.152 billion in total tenders, of which P12 billion was awarded.

In a text message to reporters, National Treasurer Rosalia de Leon said the auction committee decided to reject all bids for the 364-day debt papers as rates were higher than the previous auction, as well as in the secondary market.

The increase in rates happened ahead of the launch of the BSP’s own securities and the US Federal Open Market Committee meeting later this week.

“Banks are positioning in anticipation of the maiden BSP offering, as well as the outcome of Fed policy meeting this week,” De Leon said. “Banks were saying (they) will go for one-year if BTr accepts big pick up vs. secondary levels.”

Last week, the central bank announced it would start issuing its own securities on Sept. 18. For its maiden issuance, the debt papers will have a tenor of 28 days, with an indicative offer volume of P20 billion.

The BSP said auction volumes would be small at the outset, but would be gradually scaled up depending on market response and liquidity forecasts.

Meanwhile, De Leon said the government has enough space to fund the P165 billion Bayanihan to Recover as One or Bayanihan 2 Act.

“Bayanihan 2 is adequately covered by debt service savings and additional income,” the treasurer said.

She said the law’s provision increasing the lending cap of the BSP to the government by 10 percent would also help fund the requirements for COVID-19 response and the economic recovery strategy.

Previously, the BSP can only provide direct financing of about P540 billion, of which P300 billion has already been tapped.