THE Bureau of the Treasury (BTr) upsized the volume of Treasury Bills (T-bills) it awarded on Monday to P21 billion as rates dropped for all tenors.
The volume awarded was higher than the initial P15-billion offer.
National Treasurer Rosalia V. De Leon said they decided to double the accepted non-competitive bids for each of the tenor on the back of strong investor appetite.
However, all tenors fetched lower average rates compared to the previous auction and secondary benchmark rates.
Sought why there was a drop in the average rates on Tuesday compared to the previous auction, De Leon said: “Supply is small.”
“BTr reduced [T-bills] volume and increased bonds as investors now looking for yield pick from longer tenors,” she added.
To recall, the Treasury slashed the volume of offering for each of the T-bills auction days for the month of June to only P15 billion from P25 billion in the past two months.
However, the Treasury is aiming to borrow more from the local debt market this June at P215 billion, up by 26 percent compared to only P170 billion that it programmed to borrow per month in April and May.
The bulk of the programmed domestic borrowings for June, or P140 billion, will now be raised through Treasury Bonds with longer tenors while the rest of the amount is planned to be raised by auctioning off P75 billion in T-bills.
Nonetheless, Monday’s auction was oversubscribed by nearly six times the P15-billion initial offer with total bids amounting to P87.17 billion.
The 91-day T-bills fetched a lower average rate of 1.235 percent, slipping 3.4 basis points from 1.269 percent in the previous auction.
Tenders for the 91-day T-bills also hit P22.15 billion, more than four times the initial P5-billion offer.
For the 182-day T-bills, the average rate settled at 1.472 percent, down by 6.9 basis points from 1.541 percent previously. Total bids for the tenor reached P27.41 billion, more than five times the initial P5-billion offer.
Lastly, the 364-day T-bills’ average rate stood at 1.723 percent, falling by 7.3 basis points from 1.796 percent in the previous auction. Bids for the debt paper amounted to P37.61 billion, more than seven times as much as the initial P5-billion offer.
For this year, the national government has set a P3.03-trillion gross borrowing program, roughly the same amount it borrowed in 2020.
Eighty percent of the amount is programmed to be raised through domestic sources while the remaining 20 percent is expected to come from foreign sources.
The government borrows to finance its spending requirements as well as to cover its budget deficit. Budget deficits occur when expenditures exceed revenues.
The Cabinet-level Development Budget Coordination Committee (DBCC) earlier raised its projection for the country’s budget deficit-to-GDP (gross domestic product) ratio this year to 9.4 percent or P1.86 trillion from 8.9 percent or P1.78 trillion previously.
Finance Secretary Carlos G. Dominguez III has expressed concern on the projected rise in the country’s fiscal deficit, adding that any additional stimulus program has to be revenue-neutral.
Data from the BTr released last week showed the government’s cumulative budget deficit as of end-April reached P365.9 billion, inching up by 1.63 percent from last year’s budget gap of P360 billion.
The country’s outstanding debt has also reached a new record-high of P10.77 trillion as of end-March this year, up by 27.1 percent from P8.48 trillion a year ago.
The Duterte government expects the country’s debt-to-GDP ratio this year to still be below the 60-percent threshold.
The DBCC also recently slashed its growth projection for the Philippine economy this year to 6 percent to 7 percent from its previous forecast range of 6.5 percent to 7.5 percent due to the emergence of new Covid-19 variants and the re-imposition of stricter lockdown measures in the National Capital Region Plus during the second quarter of this year.
The Philippine Statistics Authority earlier reported that the country’s GDP contracted 4.2 percent in the first quarter of the year, marking the economy’s fifth consecutive quarter of decline.
Socioeconomic Planning Secretary Karl Kendrick T. Chua has said the economy needs to grow an average of 10 percent in the next three quarters to achieve the low-end of the government’s target.
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