T-bills fully awarded at mostly lower rates on strong demand

The government made a full award of the Treasury bills (T-bills) it offered on Monday at mostly lower rates amid strong demand and the peso’s recent recovery against the dollar.

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 51.814 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 14.715 billion. The three-month paper was quoted at an average rate of 5.575%, 2.3 basis points (bps) above the 5.552% seen last week, with accepted rates ranging from 5.543% to 5.59%.

The government also raised PHP 5 billion as planned from the 182-day securities as bids for the tenor reached PHP 15.983 billion. The average rate for the six-month T-bill was at 5.96%, down by 0.6 bp from 5.966% seen last week, with accepted rates at 5.938% to 5.974%.

Lastly, the BTr borrowed the programmed PHP 5 billion via the 364-day debt papers as demand for the tenor stood at PHP 21.116 billion. The average rate of the one-year T-bill inched down by 0.8 bp to 6.19% from the 6.198% quoted last week. Accepted yields were from 6.15% to 6.2%.

At the secondary market before Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 5.6553%, 5.9867%, and 6.193%, 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 5.575%, 5.96% and 6.19%, respectively, all lower than secondary market rates,” the BTr said in a statement on Monday.

“The auction was 3.5 times oversubscribed, attracting PHP 51.8 billion in total tenders. With its decision, the Committee raised the full program of PHP 15 billion for the auction,” it added.

T-bill yields mostly declined as the peso rebounded after it hit a near nine-month low last week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The lower T-bill rates awarded today moved in line with the recent recovery of the peso,” a trader likewise said in an e-mail.

The peso hit a near nine-month low of PHP 56.94 per dollar on Sept. 5, but has since rebounded.

On Friday, the local unit closed at PHP 56.63 versus the dollar, strengthening by 16 centavos from Thursday’s PHP 56.79 finish, data from the Bankers Association of the Philippines’ website showed.

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

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 from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — A.M.C. Sy