Government sells additional ₧3B in securities amid high rates


THE Bureau of the Treasury (BTr) opened the tap facility to sell an additional P3 billion in government-backed securities despite a slight uptick in rates—prompted by the central bank governor’s policy signaling.

National Treasurer Rosalia V. De Leon the Treasury decided to open the tap facility auction for an additional offering “to take advantage” of the non-competitive bids given the “good” rate.

The additional offering came even after the Treasury fully-awarded P15 billion in Treasury Bills (T-bills) on Monday’s auction, which saw rates moving sideways and ended more than twice oversubscribed. Total submitted bids reached P36.1 billion.

The rates for all tenors were also lower than secondary market benchmark rates.  De Leon said rates moved sideways following the statement of Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno that an early rate hike would do more harm than good to the economy.

Diokno expressed his views as monetary authorities in other economies used such tool to fight off steadily-rising inflation, brought about by a “normalization” in trade and consumption.

Speaking to reporters last Sunday, Diokno said while central bankers and policy-makers seem divided on the path of inflation, the BSP’s assessment continues to show inflation retreating to within target levels in the coming months.

“The BSP staff forecasts that average inflation this year will be about 4.5 percent, slightly above the upper range of the target 2-to-4 percent,” Diokno said. “Inflation is expected to settle at an average of 3.3 percent in 2020.”

While the country’s average inflation of 4.5 percent from January to September exceeded government’s target band, the central bank chief said he still believes the elevated inflation in the past months is still “transitory.”

Investors may have taken the cue and stuck to the longer tenor, ushering a slight uptick in the rate fetched by 364-day T-bills.

These debt papers capped at an average rate of 1.604 percent, a 1.7-basis point (bps) rise from 1.587 percent in the last auction. The tenor attracted total bids of P10.54 billion, which is twice the equivalent of the P5-billion offering.

The 91-day T-bills fetched an average rate of 1.113 percent, up by 1.8 bps from the previous auction’s 1.095 percent. Tenders for the tenor amounted to P8.68 billion.

For the 182-day T-bills, the rate was almost unchanged at 1.39 percent. This was slightly lower than 1.391 percent previously. Bids for the security reached P16.87 billion, more than thrice the P5 billion offering.

For this month, the Treasury is aiming to raise P200 billion from the local debt market to help the national government meet its programmed borrowing for this year of P3.1-trillion.

As of end-August this year, the national government’s outstanding debt has hit a new record-high of P11.64 trillion, up by more than a fifth from P9.62 trillion a year ago.

Last week, Finance Secretary Carlos G. Dominguez III reiterated that posting a 60-percent debt-to-GDP (gross domestic product) ratio is “manageable.”

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