AS investors flocked to the first government securities auction for the year, the Bureau of the Treasury awarded P24 billion in Treasury Bills (T-bills), an upsize from its initial offering of P20 billion.
Broken down, the Treasury awarded P7 billion each for 91-day T-bills and 182-day T-bills while it fully awarded P10 billion in 364-day T-bills.
However, National Treasurer Rosalia V. De Leon said rates were down across the board on the back of expectations of easing inflation in December. Government statisticians would release the December figures today, January 5.
Rates were all lower than the previous auction and secondary market trading levels. The auction was more than 4.2-times oversubscribed with total bids reaching P83.6 billion, prompting the auction committee to double the accepted non-competitive bids for the 91-day T-bills and 182-day T-bills to P4 billion each.
Asked for comment, De Leon attributed the strong liquidity to the maturing P21 billion in T-Bills this week.
She said the auction committee also decided to open the tap facility for an additional P10 billion offering for 364-day T-bills.
“[We] welcome [a] strong market for first auction in 2021,” De Leon told reporters after the auction. “Rates decline ahead of tomorrow’s December CPI [consumer price index] report [and expected] easing of inflation last month.”
The 91-day T-bills fetched an average rate of 0.987 percent, 3.5-basis point lower than the previous auction’s 1.022 percent. The tenor attracted total tenders of P19.4 billion, nearly four times higher than the P5-billion initial offering.
Meanwhile, the 182-day T-bills posted an average rate of 1.369 percent, slipping by 3.1 basis points from 1.4 percent in the previous auction. Volume of bids for the tenor reached P21.17 billion, equivalent to four times as much as the P5-billion initial offering.
The 364-day T-bills’ average rate settled at 1.614 percent, dropping by 7.2 basis points from 1.686 percent in the previous auction. Bids for the security reached P43.055 billion, up by more than four times compared to P10-billion offer.
For this month, the Treasury has programmed to borrow P140 billion, a chunk of the P3 trillion that government’s planned borrowing for the year.
Economic managers expect the country’s outstanding debt to further swell to P11.98 trillion and the country’s debt-to-GDP (gross domestic product) ratio to rise to 58.28 percent.
The government has last year ramped up its borrowing program to an all-time high nominal P3 trillion from the planned P1.4 trillion. The funds should cover the expected doubling of the budget deficit as well as finance the spending requirements for a Covid-19 response.
The government has earlier projected the country’s debt-to-GDP ratio in 2020 to increase to 53.91 percent of GDP—a level it hasn’t seen in over a decade—from a record low of 39.6 percent of GDP in 2019.