Gov’t fully awards T-bills as rates retreat

The government fully awarded Treasury bills (T-bills) at an auction on Monday as rates mostly fell amid a large amount of retail Treasury bond (RTB) maturing and softer expectations for US inflation.

The Bureau of the Treasury (BTr) raised PHP 15 billion as planned from the T-bills as total bids reached PHP 50.708 billion, more than thrice the amount on the auction block.

The Treasury raised PHP 5 billion as programmed from the 91-day T-bills as tenders reached PHP 13.555 billion. The three-month paper was quoted at an average rate of 5.772%, 0.6 basis point (bp) lower than last week. Accepted rates ranged from 5.73% to 5.825%.

The government also fully awarded PHP 5 billion in 182-day debt as bids hit PHP 17.631 billion. The average rate for the six-month T-bill rose by 2.9 bps to 5.966% from last week. Accepted rates were 5.93% to 5.993%.

The BTr also sold PHP 5 billion of 364-day debt as demand totaled PHP 19.522 billion. The average rate of the one-year T-bill went down by 1.3 bps to 6.087%. Accepted yields were 6.089% to 6.125%.

At the secondary market before the auction on Monday, the 91-, 182- and 364-day T-bills were quoted at 5.7652%, 5.9746% and 6.1049%, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the BTr.

T-bill rates mostly fell on Monday due to maturing retail Treasury bonds worth P700 billion, increasing liquidity in the financial system, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

One set of RTBs matured on March 9, while another matured on March 12.

Both were included in the bond exchange program for the 30th tranche of retail Treasury bonds, from which the government raised PHP 243.45 billion.

“The lower T-bills awarded today reflected market expectations of a potentially softer US consumer price index report tomorrow,” a trader said in an e-mail.

US inflation eased to 3.1% in January from 3.4% a month earlier.

On Tuesday, the BTr will offer PHP 30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and 10 months.

The Treasury is looking at raising P180 billion from the domestic market this month — PHP 60 billion from T-bills and PHP 120 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of economic output this year. — Aaron Michael C. Sy