THE Bureau of the Treasury raised P10 billion from its auction of Treasury Bills (T-bills) with investors preferring short-term government securities.
The auction was more than four times oversubscribed as the tenors attracted total bids of P41.3 billion.
Average rates during Monday’s auction ended up moving sideways and were also lower than the secondary market benchmark rates.
National Treasurer Rosalia V. De Leon told reporters after the auction that the rates were slightly lower for the 92-day and 183-day T-bills and less than a basis point higher for the 365-day security.
In terms of investor appetite, De Leon said the market is still anticipating the inflation print for the month of November as investors weigh the risks posed by the Omicron variant of Covid-19.
The new variant, which has been dubbed by the World Health Organization as a “variant of concern,” has already been detected in 38 countries. Analysts fear a new wave of infection would prompt the imposition of lockdown measures that would curtail the economic-recovery momentum expected to gain headway this season.
“Bias continues on short-end with Omicron uncertainties,” De Leon has said.
Rates fetched by the 92-day T-bills averaged 1.155 percent, down by 0.9 basis points (bps) from the previous auction’s 1.164 percent. Tenders for the security reached P13.3 billion, exceeding the P2-billion offering by more than six times.
Meanwhile, the 183-day T-bills’ average rate slid by 0.6 bps to 1.443 percent from 1.449 percent. Bids for the tenor hit P16.01 billion or five times the P3-billion offered.
The average rate of 365-day T-bills posted an uptick of 0.7 bps to reach 1.643 percent from 1.636 percent in the last auction. The debt paper recorded total bids of P11.97 billion, more than twice the P5-billion set for the tenor.
For this month, the Treasury programmed to borrow P70 billion from the local debt market. The amount is smaller than previous months as government slows down in taking up debt and to stick to its annual borrowing program. Likewise, the state attempts to maintain its debt-to-gross domestic product ratio “at “sustainable levels.” The ratio measures the proportion of the country’s national debt to its GDP.
As of the end of the third quarter, the debt-to-GDP ratio is already at 63.1 percent, zooming past the projected 59.1 percent target for this year.
Government economists forecast the debt-to-GDP ratio to peak next year at 60.8 percent—slightly above the internationally-accepted threshold—before gradually tapering off to 60.7 percent and 59.7 percent in 2023 and 2024, respectively.
The Department of Finance (DOF) sees the national government returning to its pre-pandemic debt and budget deficit levels only by 2024 or by 2025, two or three years after the Duterte regime. This, however, would be achieved if the recommended fiscal measures are passed early by the next administration and if the economy quickly recovers, according to the DOF.
Image credits: Walter Eric Sy | Dreamstime.com