THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday as rates went down across the board on strong demand and bets of policy easing here and in the United States by next year amid slowing inflation.
The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Tuesday, with total bids reaching P66.695 billion or more than four times the amount on the auction block.
Broken down, the Treasury made a full P5-billion award of the 91-day T-bills as tenders for the tenor reached P29.775 billion. The three-month papers were quoted at an average rate of 5.611%, 27.3 basis points (bps) lower than the 5.884% seen for the tenor last week, with accepted rates ranging from 5.608% to 5.618%.
The government also raised P5 billion as planned from the 182-day securities as bids stood at P22.815 billion. The average rate for the six-month T-bill was at 5.823%, falling by 27.2 bps from the 6.095% fetched last week, with accepted rates from 5.818% to 5.838%.
Lastly, the BTr borrowed P5 billion as programmed via the 364-day debt papers as demand reached P14.105 billion. The average rate of the one-year T-bill inched down by 4.2 bps to 6.184% from the 6.226% quoted for the tenor last week. Accepted yields were from 6.1% to 6.275%.
At the secondary market before Tuesday’s auction, the 91-, 182- and 364-day T-bills were quoted at 5.8080%, 5.9565%, and 6.1451%, 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 5.611%, 5.823% and 6.184%, respectively, all lower than previous auction rates,” the BTr said in a statement on Tuesday.
“The auction was 4.4 times oversubscribed with total bids reaching P66.7 billion. With its decision, the Committee raised the full program of P15 billion for the auction,” it added.
The Treasury made a full award of its T-bill offer at lower rates amid strong investor demand, a trader said by phone.
T-bill yields dropped across the board on expectations of rate cuts by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve in 2024 “amid the easing trend in US and local inflation data moving towards the inflation target,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Philippine headline inflation eased to 5.4% in June from 6.1% in May. It was the slowest in 14 months or since the 4.9% clip in April last year.
For the first six months, inflation averaged 7.2%, still well above the BSP’s 2-4% target for the year.
Easing inflation has prompted the Monetary Board to extend its policy pause for a second straight meeting last month, keeping the key interest rate at a near 16-year high of 6.25%.
The BSP will meet to discuss policy anew on Aug. 17.
Meanwhile, the US consumer price index (CPI) rose by 0.2% last month after climbing by 0.1% in May.
In the 12 months through June, the CPI climbed by 3% after the 4% increase seen in May.
The Fed on Tuesday began a two-day policy meeting, where it is expected to hike rates anew.
The US central bank raised its target interest rate by a total of 500 bps to a range between 5% and 5.25% before pausing its tightening cycle last month.
Tuesday’s T-bill auction was the last one for July. The Treasury raised P53.636 billion via T-bills this month out of the P60-billion program as it made a full award in just two of its four auctions.
On Wednesday, the BTr will auction off P30 billion in fresh seven-year Treasury 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
