The Bureau of the Treasury (BTr) has fully awarded all tenors during the Treasury bills (T-bills) auction on Monday with a total of P20 billion as demand for the government paper was seen to be strong.
National Treasurer Rosalia V. de Leon told reporters that the auction committee saw strong demand for the T-bills as tenders for all tenors amounted to a combined P30.316 billion, higher than the P20 billion on offer.
“We had a full award. We also [had] a very strong demand with the bid-to-cover ratio, almost twice on the 91-day, and then 1.5 times for the 182-days and 364-days,” de Leon said. “So we hope that this would continue given the very dovish remarks coming from the Fed [Federal Reserve System]. And of course the BSP [Bangko Sentral ng Pilipinas] put on hold the rate during the last policy meeting last Thursday.”
The 91-day T-bill was awarded the full P6 billion with tenders for the security amounting to P7.344 billion.
The average annual rate for the security settled at 5.550 percent, posting a 6.60-basis-point increase from the previous rate of 5.484 percent.
Bids for the 182-day tenor amounted to P11.569 billion with the auction committee awarding the full P6 billion on offer.
The rate for the tenor bucket settled at 5.933 percent, also showing a 6.60-basis-point increase from the previous rate of 5.867 percent.
For the 364-day T-bill, it was awarded P8 billion as tenders totaled P11.403 billion.
The rate for the security rose to 5.983 percent, expanding by 5.90 basis points from the rate during the previous auction at 5.924 percent.
The demand for government paper prompted the auction committee to open its over-the-counter window facility for tax exempt government-owned and -controlled corporations.
De Leon pointed out that a driver for the slight uptick in rates for the security may be because of news of a retail Treasury bond (RTB) issuance.
“Well, off hand, because there’s news that we are going to have an RTB. That’s anticipated by the market given that we have a P70-billion maturity on February 19,” she added. “But for now, given that we still have a very strong cash position, that’s still something that we still have to confirm whether to move on ahead. And also, take into consideration other things before we confirm that we are going to have the RTB sale because of that huge maturity.”
Before any issuance of RTB this year, de Leon said the BTr would be considering the rate environment and the demand for the government security, among others.
“Obviously, it will not really be on the long end of the curve. If ever we proceed, [we are] looking at the belly of the curve,” she said. “Usually, we set for the auction at P30 billion, and then we upsize it depending on the volume, also depending on the rate, and once we see that there is a very strong demand during the public offering itself. That’s why we always reach around P100 billion.”
In June 2018, the government was able to raise around P121 billion in its RTB issuance with a tenor of three years with a coupon rate of 4.875 percent.
Last week, the BSP’s Monetary Board decided to keep the overnight reverse repurchase facility unchanged at 4.75 percent, as well as all its monetary-policy levers, during its first monetary-policy meeting of the year as inflation pressures start to dissipate.
Central Bank Deputy Governor Diwa C. Guinigundo said the Monetary Board’s decision is based on its assessment of a more manageable inflation environment for 2019, with risks to this inflation outlook remaining evenly balanced for the time being.