THE GOVERNMENT made a partial award of the short-term securities it offered on Monday as yields mostly climbed before an expected rate hike by the Bangko Sentral ng Pilipinas (BSP) this week, and with players looking for duration for higher returns.
The Bureau of the Treasury (BTr) raised a combined P57.665 billion from its offering of cash management bills (CMBs) and Treasury bills (T-bills), short of its P60-billion target despite tenders totaling P122.542 billion, more than double the amount on offer.
This was lower than the P167.016 billion in bids seen last week for the P46 billion on auction.
Broken down, the Treasury borrowed only P7.665 billion via the 35-day CMBs, below the P20-billion program, despite demand reaching P22.966 billion. The one-month bill fetched an average rate of 4.823%, up by 0.7 basis point (bp) from the 4.816% quoted on July 20 when they were last offered. Bid yields were from 4.775% to 4.89%.
Meanwhile, the government raised P50 billion as planned from the T-bills as combined tenders reached P99.576 billion, reflecting “strong investor demand,” the BTr said in a statement.
For the 91-day T-bills, the Treasury borrowed P20 billion as bids for the tenor reached P35.798 billion. The three-month paper fetched an average rate of 5.051%, up by 4.3 bps from 5.008% last week. Tenders accepted had yields from 4.96% to 5.104%.
The government also raised P15 billion via the 182-day papers as tenders hit P42.232 billion. The average yield on the six-month T-bill was at 5.433%, inching down by 0.9 bp from 5.442% previously. Bid rates awarded were from 5.399% to 5.4673%.
Lastly, the BTr also sold P15 billion in 364-day securities as demand for the tenor totaled P21.455 billion. The one-year paper fetched an average rate of 5.64%, rising by 2.7 bps from 5.613% last week. Accepted yields ranged from 5.6% to 5.682%.
At the secondary market before Monday’s auction, the 35-, 91-, 182-, and 364-day T-bills were quoted at 4.7644%, 5.0025%, 5.3212%, and 5.6593%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data from the Treasury.
“Demand for the CMBs and T-bills were weaker compared to previous offers, likely in anticipation of the upcoming three-year bond auction and other data releases this week,” a trader said in a text message.
On Tuesday, the government is looking to borrow P30 billion from reissued seven-year Treasury bonds (T-bonds) with a remaining life of three years and one month.
Yields were mostly higher ahead of an expected rate hike by the BSP on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
A BusinessWorld poll showed that 19 of 24 analysts expect the Monetary Board to raise the target reverse repurchase by 25 bps for a third straight meeting this week as inflation stays elevated.
The rest expect the central bank to hold fire amid lingering uncertainties, especially with economic growth weakening.
The Monetary Board has raised benchmark rates by a cumulative 50 bps since April, bringing the policy rate to 4.75%.
BSP Governor Eli M. Remolona, Jr. has said that they are ready to adjust their monetary policy stance as necessary to bring inflation back to their target amid broadening price risks, especially with the Middle East conflict still unresolved.
However, weak Philippine economic growth somehow eases the pressure on the central bank to take aggressive action, he said.
The Treasury plans to raise P330 billion from the domestic market this month, or P200 billion via T-bills and P130 billion through T-bonds.
The government borrows from local and foreign sources to help finance its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year. — Aaron Michael C. Sy
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