THE Bureau of the Treasury (BTr) fully awarded P20 billion in Treasury Bills (T-bills) on Monday as rates rose, tracking the movement of US government securities.
National Treasurer Rosalia V. De Leon attributed the rise in the rates due to “correction as US (United States) treasuries moved up [on] bright prospects for [the] Biden stimulus.” US President Joe Biden is pushing for the passage of a $1.9-trillion stimulus package to cushion the economic impact of Washington’s response to a pandemic.
But unlike previous auctions, the issuance was not upsized and rates across the board ended up higher.
Nonetheless, the auction was still oversubscribed by more than twice the P20-billion offer as it attracted total bids of P50 billion albeit lower compared to previous T-bills auctions since the start of the year.
Sought whether its ongoing 3-year Retail Treasury Bond (RTB) offering is siphoning off some liquidity in the market, De Leon explained that the RTB is a “different segment of curve.”
The National Treasurer said she sees that some investors are holding back and have taken a wait-and-see position. De Leon mused investors may park their cash in the Term Deposity Facility of the Bangko Sentral ng Pilipinas “in the meantime.”
However, she said they opened the tap facility for an additional P5-billion offering for 364-day T-bills.
The average rate for the 91-day T-bills on Monday rose by 3 basis points to 0.875 percent from previous auction’s 0.845 percent. Total tenders for the security reached P12.6 billion, more than double the P5-billion offer.
Meanwhile, the 182-day T-bills capped at an average rate of 1.067 percent, inching up by 2.1 basis points from 1.046 percent previously. Total bids for the tenor amounted to P13.13 billion, more than twice the P5-billion offer.
As for the 364-day T-bills, the average rate surged to 1.527 percent, up by 11.1 basis points from 1.416 percent in the last auction. The tenor got P24.3 billion in total tenders, equivalent to more than twice the P10-billion offer.
For this month, the Treasury programmed to borrow P140 billion from the local debt market, the same amount it planned to raise in January. It is also currently offering 3-year RTBs with a coupon rate set at 2.375 percent, lower by 200 basis points from 4.375 percent coupon rate of the previous 3-year RTBs the government sold in February last year.
Generally considered low-risk investment instruments, RTBs allow investors to earn a fixed interest based on prevailing market rates that are paid quarterly during the term of the bond.
During the rate-setting auction for the government’s 25th RTB offering, the government raised an initial P221.218 billion.
Proceeds from the issuance of RTBs are expected to boost the government’s funds for its Covid-19 response and recovery efforts.
In addition to the new RTBs, the BTr is also allowing holders of previously issued bonds to exchange and reinvest their bond holdings for the RTB-25.
The offer period is set to end on March 4, with settlement scheduled on March 9.
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