Gov’t makes full award of T-bill offering

The government made a full award of the Treasury bills (T-bills) it offered on Monday at lower rates amid dovish signals from the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

The Bureau of the Treasury (BTr) raised PHP 15 billion as planned from its offering of T-bills on Monday as total bids reached PHP 50.506 billion, or more than thrice the amount on the auction block.

Broken down, the Treasury borrowed PHP 5 billion as programmed from the 91-day T-bills as tenders for the tenor reached PHP 15.4 billion. The three-month paper was quoted at an average rate of 5.71%, 3.4 basis points (bps) lower than the 5.744% seen last week. Accepted rates ranged from 5.66% to 5.775%.

The government likewise made a full PHP 5-billion award of the 182-day securities, with bids reaching PHP 15.771 billion. The average rate for the six-month T-bill stood at 5.88%, down by 3.6 bps from the 5.916% fetched last week, with accepted rates at 5.85% to 5.9%.

Lastly, the BTr raised PHP 5 billion as planned via the 364-day debt papers as demand totaled PHP 19.335 billion. The average rate of the one-year T-bill went down by 5.1 bps to 5.982% from the 6.033% quoted last week. Accepted yields were from 5.95% to 5.997%.

At the secondary market on Monday before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7745%, 5.9187%, and 6.0645%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

“The T-bill auction rates came in lower this week following dovish policy cues from the latest Fed meeting,” a trader said in an e-mail.

Fed Chair Jerome H. Powell said on Wednesday recent high inflation readings had not changed the underlying “story” of slowly easing price pressures in the US as the central bank stayed on track for three interest rate cuts this year and affirmed that solid economic growth will continue, Reuters reported.

Speaking after a policy meeting at which officials left the benchmark overnight interest rate in the 5.25%-5.5% range and held onto their outlook for three cuts in borrowing costs this year, Mr. Powell said the timing of those reductions still depends on officials becoming more secure that inflation will continue to decline towards the Fed’s 2% target even as the economy continues to outperform expectations.

Rates went down amid signals that the BSP may begin its easing cycle before the Fed, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

BSP Governor Eli M. Remolona, Jr. this month said their easing cycle would not be dependent on the Fed’s policy moves and would instead be based on data.

The BSP kept its policy rate at a near 17-year high of 6.5% for a third straight meeting in February. The Monetary Board will next meet to review policy on April 8.

On Tuesday, the BTr will offer PHP 30 billion in reissued 20-year Treasury bonds with a remaining life of 19 years and 11 months.

Monday’s T-bill auction was the last for the month. The BTr raised the programmed PHP 60 billion through short-term papers in February.

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. — A.M.C. Sy with Reuters