Gov’t hikes Treasury bill award as demand soars

THE GOVERNMENT upsized the award of the Treasury bills (T-bills) it offered on Monday as it saw strong market demand, with rates also lower than those quoted at the secondary market.

The Bureau of the Treasury (BTr) raised P34.2 billion via the T-bills it auctioned off, higher than the P27-billion plan as the offer was more than four times oversubscribed, with total tenders reaching P108.1 billion. This was also well above the P87.456 billion in bids recorded on Dec. 15 for a P20-billion offering.

The Auction Committee increased its award as the auction was met with strong demand, with all T-bill tenors quoted at average yields that were lower than secondary market rates, the Treasury said in a statement.

This led the BTr to double its acceptance of noncompetitive bids for the 91- and 182-day T-bills to P7.2 billion each. 

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P36.235 billion. The three-month paper fetched an average rate of 4.755%, up by 2.4 basis points (bps) from 4.731% in the previous auction. Yields accepted were from 4.69 to 4.78%.

The Treasury also increased the award for the 182-day debt to P12.6 billion from the P9-billion program as tenders hit P41.15 billion. The average rate of the six-month T-bill was at 4.895%, down by 0.8 bp from 4.903% previously. Tenders awarded carried yields from 4.83% to 4.923%.

Lastly, the BTr sold P9 billion as planned in 364-day securities as the tenor attracted bids totaling P30.715 billion. The one-year paper’s average yield was at 4.937%, up by 1.3 bps from 4.924% the previous auction. Accepted rates were from 4.875% to 4.937%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.8547%, 4.9769%, and 5.0375%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government hiked its T-bill award as the offer was received well, a trader said in a phone interview. “Traders were looking to load up their portfolios for the year.”

The trader added that average rates were mostly higher than those fetched at the Dec. 15 auction amid inflation concerns due to the United States’ attack on Venezuela and its potential impact on global oil prices.

The Philippines is a net importer of petroleum products.

“Treasury bill average auction yields mostly corrected slightly higher… as markets adopted a wait-and-see attitude after the recent developments on the US’ invasion of Venezuela over the weekend,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Oil prices fell on Monday as adequate global supplies offset concerns about supply disruptions due to the US capture of Venezuelan President Nicolas Maduro in an audacious raid over the weekend, Reuters reported.

Brent crude futures were down 50 cents or 0.8% to $60.26 a barrel at 0752 GMT, while US West Texas Intermediate crude was 53 cents or 0.9% lower at $56.79 a barrel.

The key benchmarks were volatile in early Asian trade as investors assessed the political upheaval in the Organization of the Petroleum Exporting Countries member Venezuela and the potential impact on oil supply.

US President Donald J. Trump said Washington would take control of the country and that a US embargo on Venezuelan oil remained in full effect, after detaining Mr. Maduro in New York on Sunday.

In a global market with plentiful oil supply, analysts said any further disruption to Venezuela’s exports would have little immediate impact on prices.

On Tuesday, the government is looking to raise up to P50 billion from a dual-tenor Treasury bond (T-bond) offering, as it could borrow between P20 billion and P30 billion each in reissued seven-year papers with a remaining life of two years and seven months and via reissued 10-year debt with a remaining life of nine years and three months.

The BTr is looking to raise P268 billion from the domestic market this month, or P106 billion in T-bills and P160 billion in T-bonds

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.647 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy with Reuters