Gov’t fully awards Treasury bills at lower rates

The government made a full award of the Treasury bills (T-bills) it offered on Monday at lower rates before the release of August inflation data.

The Bureau of the Treasury (BTr) raised PHP 15 billion as planned via the T-bills it auctioned off on Monday as total bids reached PHP 47.56 billion, or more than thrice the amount on offer.

Broken down, the Treasury made a full PHP 5-billion award of the 91-day T-bills as tenders for the tenor reached PHP 13.242 billion. The three-month paper was quoted at an average rate of 5.552%, 2.1 basis points (bps) below the 5.573% seen last week, with accepted rates ranging from 5.5% to 5.6%.

The government also raised PHP 5 billion as planned from the 182-day securities as bids for the tenor reached PHP 15.043 billion. The average rate for the six-month T-bill was at 5.966%, down by 2.7 bps from 5.993% seen last week, with accepted rates at 5.948% to 5.985%.

Lastly, the BTr borrowed the programmed PHP 5 billion via the 364-day debt papers as demand for the tenor stood at PHP 19.275 billion. The average rate of the one-year T-bill declined by 9.9 bps to 6.198% from the 6.297% quoted last week. Accepted yields were from 6.17% to 6.22%.

At the secondary market before Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 5.7081%, 5.9878%, and 6.2632%, respectively, based on PHP Bloomberg Valuation Reference Rates data provided by the Treasury.

“The Auction Committee fully awarded bids for Treasury bills (T-bills) at today’s auction. The 91-, 182-, and 364-day T-bills fetched average rates of 5.552%, 5.966% and 6.198%, respectively, all lower than previous auction results and secondary market rates,” the BTr said in a statement on Monday.

“The auction was 3.2 times oversubscribed, attracting PHP 47.6 billion in total tenders. With its decision, the Committee raised the full program of PHP 15 billion for the auction,” it added.

The result of Monday’s auction was in line with expectations as the market awaited the release of August inflation data, a trader said in a phone interview.

August consumer price index data will be released on Tuesday.

A BusinessWorld poll of 18 analysts yielded a median estimate of 4.9% for August inflation, near the lower end of the Bangko Sentral ng Pilipinas’ (BSP) 4.8-5.6% forecast for the month.

If realized, this would be faster than the 4.7% seen in July, but lower than the 6.3% print in August 2022.

It would mark the 17^th straight month of inflation exceeding the BSP’s 2-4% target.

T-bill yields tracked the recent decline in rates of US Treasuries amid bets that the US Federal Reserve will not hike rates at its Sept. 19-20 meeting, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Benchmark Treasury yields rebounded on Friday after a US jobs report showed an uptick in unemployment, cementing expectations that the Fed will let interest rates stand at its September meeting, Reuters reported.

US 10-year Treasury yields reversed earlier declines following the employment report, as investors pared positions ahead of the Labor Day weekend.

The Fed in July hiked borrowing costs by 25 bps to the 5.25%-5.5% range. Since March 2022, the US central bank has raised its policy rate by 525 bps.

On Tuesday, the BTr will offer PHP 30 billion in fresh three-year Treasury bonds (T-bonds).

The BTr wants to raise PHP 180 billion from the domestic market this month or PHP 60 billion via T-bills and PHP 120 billion via T-bonds.

The government borrows to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — AMCS with Reuters