Investors swarm T-bill auction

MANILA, Philippines — Treasury bills (T-bills) fetched lower rates across-the-board yesterday as investors swarmed the auction facility amid ample liquidity in the financial system.

During yesterday’s auction, the Bureau of the Treasury (BTr) fully awarded P5 billion worth of 91-day securities at an average rate of 0.977 percent, down one basis point from 0.987 percent last week.

Strong demand met the P5 billion offering, with total tenders amounting to P21.45 billion.

A total of P5 billion in T-bills maturing in 182 days were likewise fully awarded, with rates averaging at 1.36 percent. This was 0.9 basis point lower compared to the 1.369 percent recorded in the previous auction a week ago.

The auction was almost 4.5 times oversubscribed as total bids amounted to P22.22 billion.

Lastly, the average rate for the 364-day settled at 1.605 percent, 0.9 basis point lower than last week’s level of 1.614 percent, after the P10 billion offering was fully awarded.

Total tenders reached P43.045 billion, more than four times larger than the offer size.

Overall, the auction attracted P86.715 billion in total bids, P20 billion of which was accepted.

In a text message to reporters, National Treasurer Rosalia de Leon said the results of the auction reflected the strong appetite for short-term debt papers.

“Rates trending down with abundant liquidity. Preference is on front end of curve,” de Leon said.

A bond trader echoed the same analysis as the Treasurer, saying there was strong demand for securities with short tenors on the back of strong liquidity. The trader said rates may continue their downward trend as liquidity conditions were seen to persist.

Meanwhile, asked if proceeds of the government’s fund raising activities would be used for COVID-19 vaccine procurement, de Leon said, “only what is in the GAA (General Appropriations Act).”

Under the 2021 budget, P2.5 billion in funds were already allocated for COVID-19 vaccines. Another P70 billion was provided under unprogrammed appropriations, which may be tapped when there are excess revenues, new revenue sources, and approved loans for foreign-assisted projects.

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.

For January alone, the BTr is targeting to raise P140 billion from domestic issuances.

Given its ramped up borrowing activities, the Philippines’ outstanding debt is seen to hit P11.98 trillion by the end of the year, translating to a debt-to-GDP ratio of 58.1 percent.