THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates mostly declined after global oil prices eased to two-week lows.
The Bureau of the Treasury (BTr) raised P15 billion as programmed via the T-bills it auctioned off on Monday as bids reached P37.64 billion, over twice as much as the program but lower than the P54.12 billion in tenders seen for last week’s offer.
Broken down, the BTr raised P5 billion as planned via the 91-day debt papers as it attracted P17.2 billion in tenders. The average rate of the three-month T-bill dropped by 8.3 basis points (bps) to 1.14% from 1.223% last week.
The Treasury also made a full P5-billion award of the 182-day securities as bids reached P13.44 billion. The average rate of the six-month tenor likewise inched down by 1 bp to 1.558% from the 1.568% fetched at the previous auction.
Lastly, the government borrowed P5 billion as programmed from the 364-day instruments from P6.998 billion in tenders. The tepid demand caused the average rate of the one-year paper to go up by 2.4 bps to 1.901% from 1.877% a week earlier.
At the secondary market prior to the auction, the 91-, 182-, and 364-day bills were quoted at 1.2466%, 1.5262%, and 1.9169% respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the BTr made a full award of its T-bill offering as yields were mostly lower after global oil prices eased to two-week lows.
Oil prices slumped to about two-week lows on Monday, after prolonged coronavirus disease 2019 (COVID-19) lockdowns in Shanghai, China and potential US rate hikes would hurt global economic growth and demand for fuel, Reuters reported.
Brent crude was down $3.93 or 3.7% at $102.72 a barrel, while US crude fell $3.80 or 3.7% to $98.27 a barrel, the lowest since April 12. The benchmarks lost nearly 5% last week on demand concerns.
A Reuters poll two weeks ago showed analysts expect the US Federal Reserve to make two back-to-back 50-bp interest rate hikes in May and June to respond to runaway inflation. Fed Chair Jerome H. Powell said on Thursday that a half-point increase “will be on the table” during the Fed’s next meeting on May 3-4.
The Fed’s policy-setting Federal Open Market Committee began to unwind its pandemic-driven easy stance in March when it hiked key rates by 25 bps to tame inflation.
Mr. Ricafort said other drivers for the decline in T-bill yields include the seasonal tax collections in April due to the filing of income tax returns “and the recent foreign bond sales by the government that reduce the need to borrow from the domestic market.”
The government recently raised $559 million from an offer of Samurai bonds and $2.25 billion via global sustainability bonds.
A trader said in a Viber message that the auction result was as expected as some P27 billion in T-bills are maturing this week, freeing up liquidity to support demand for the P15-billion offer on Monday.
The BTr wants to raise P200 billion from the domestic market this month, or P60 billion from T-bills and P140 billion via Treasury bonds.
Monday’s T-bill auction was the last one for April. The BTr raised P64 billion via the short-tenored papers this month, above the P60-billion program, as it made full awards of all its offerings and also accepted more non-competitive bids for some tenors at its April 11 auction.
The government borrows from local and external sources to plug a budget deficit capped at 7.7% of gross domestic product this year. — T.J. Tomas with Reuters