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Strong investor demand marks auction of T-bills

Bureau of the Treasury building in Intramuros, Manila
Bureau of the Treasury building in Intramuros, Manila

THE Bureau of the Treasury (BTr) fully awarded P25 billion in Treasury Bills (T-bills) on Monday’s auction marked with strong demand from investors.

Average rates across all tenors also ended up lower compared to the rates in the previous auction and in the secondary market.

The primary auction last May 17 was also oversubscribed with total bids reaching P83.7 billion.

National Treasurer Rosalia V. De Leon said investors are still inclined to bank on safe-haven assets. This as the market has also factored in the central bank’s downward revision of inflation forecast for this year to 3.9 percent from the 4.2-percent forecast in their February meeting.

“Strong participation as rates marginally declined [and investors] continue to stay on safe side,” De Leon said in her message to reporters. “And BSP [Bangko Sentral ng Pilipinas] trimming average inflation for the year to 3.9 percent; within target band.”

The government is targeting the country’s inflation rate this year to settle between 2 percent to 4 percent.

The BSP attributed the downward revision to the impact of the lower tariff on imported pork and the lower-than-expected inflation for March and April.

Monetary authorities decided to keep policy rates unchanged last Wednesday, the fourth after last year’s aggressive monetary policy easing.

The 91-day T-bills fetched an average rate of 1.27 percent, down by 0.8 basis point from 1.278 percent in the previous auction. Tenders for the security amounted to P16.97 billion, more than thrice the P5-billion offering.

The 182-day T-bills’ average rate also slid by 0.9 basis point to 1.54 percent from 1.549 percent in the previous auction. Total bids for the tenor hit P25.1 billion, more than triple the P8-billion offering.

Lastly, the 364-day T-bills’ average rate declined to 1.81 percent, slipping by 1.9 basis points from the previous auction’s 1.829 percent. Bids for the security reached P41.63 billion, more than thrice the P12-billion offer.

For this month, the government aims to borrow a total of P170 billion from the local debt market, the same level it programmed to borrow in April.

The national government’s outstanding debt has 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 country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020. Finance officials expect the national government’s debt to reach 57 percent of gross domestic product (GDP) this year.

As of end-2020, the country’s debt to GDP ratio surged to 54.5 percent—a 14-year-high—coming from a record-low 39.6 percent in the previous year.

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