T-bills fetch lower rates

MANILA, Philippines — The Bureau of the Treasury (BTr) started the year with a successful auction as it was able to sell P24 billion worth of Treasury bills (T-bills), priced at lower rates across-the-board.

During the first auction of the year conducted yesterday, the 91-day T-bills fetched an average rate of 0.987 percent, 3.5 basis points lower than the 1.022 percent recorded in the previous auction on Dec. 14, 2020. The last time yields for this tenor went below one percent was in November last year.

The auction was almost four times oversubscribed, with total tenders amounting to P19.413 billion. The low rates and healthy demand prompted the Treasury to double the accepted non-competitive bids, upsizing the total awarded volume to P7 billion instead of P5 billion.

Rates for the 182-day debt notes averaged at 1.369 percent, 3.1 basis points lower than the 1.4 percent in the previous auction.

Like the 91-day bills, the BTr raised the awarded volume to P7 billion from P5 billion. Total tenders reached P21.17 billion, more than four times larger than the target.

Lastly, the Treasury fully awarded P10 billion worth of 364-day securities at an average rate of 1.614 percent, 7.2 basis points lower than the previous level of 1.686 percent.

The offering was almost 4.5 times oversubscribed with total bids amounting to P43.055 billion.

Overall, the auction was able to attract P83.64 billion in total bids. The Treasury was also able to raise P24 billion, higher than the initial target of P20 billion.

Aside from upsizing the awarded volume, the BTr also decided to open the tap facility for 364-day debt papers, with the goal of raising an additional P10 billion.

In a text message to reporters, National Treasurer Rosalia de Leon said rates declined amid low inflationary expectations for December 2020.

“Rates declined ahead of tomorrow’s December CPI (consumer price index) report, expecting easing of inflation last month,” she said.

De Leon said the market also had a liquidity boost coming from the maturity of P21 billion worth of T-bills this week.

This year, the government is programmed to borrow P3.03 trillion from domestic and external sources to bridge the deficit in its budget, which is expected to widen to 8.9 percent of the gross domestic product.

The BTr is targeting to raise P140 billion from domestic issuances this month.