Mix results in T-bill auction

MANILA, Philippines — Short-term government securities yesterday fetched mixed results as rates for the 90 and 182-day Treasury bills (T-bills) declined, while yields for the 364-day debt papers inched up ahead of the Monetary Board’s policy meeting this week.

During yesterday’s auction, rates for securities maturing in 90 days averaged at 1.121 percent, 3.5 basis points down from the 1.156 percent recorded last week.

The offering was more than five times oversubscribed, with total tenders amounting to P26.58 billion.

This, paired with lower rates, prompted the auction committee to double the accepted non-competitive bids, resulting in a total award volume of P7 billion instead of P5 billion.

Meanwhile, the average rate for the 182-day T-bills declined by 1.4 basis points to 1.601 percent from 1.615 percent in the previous auction last week.

The BTr fully awarded the P5 billion offering which attracted bids amounting to P15.683 billion.

On the other hand, the average rate for the 364-day debt notes inched up by 0.8 basis point to 1.858 percent from 1.85 percent a week ago, with the auction committee deciding to fully award the P10 billion offering.

Total tenders reached P29.678 billion, almost three times larger than the offer size.

Overall, yesterday’s auction generated P71.94 billion in total tenders, P22 billion of which was awarded.

Sought for comment, National Treasurer Rosalia de Leon said rates for securities with shorter tenors went down amid strong demand from investors.

However, she said rates for 364-day securities moved up due to expectations that the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) would keep rates steady in its meeting this Thursday.

“There is still good liquidity as shown by high bid-to-cover. But given expectations for a pause on policy rates, (there is) slight movement in one-year (T-bills),” De Leon said in a text message.

To cushion the economy from the impact of the coronavirus pandemic, the Monetary Board of the BSP has so far slashed interest rates by a cumulative 175 basis points this year, bringing the overnight reverse repurchase rate to an all-time low of 2.25 percent.

On Aug. 20, the BSP took a prudent pause and kept interest rates unchanged to allow previous monetary actions to work their way through the economy.

Bank economists expect the central bank to maintain interest rates this week as monetary authorities continue to assess the impact of the moves they implemented.