THE Bureau of the Treasury fully awarded P15-billion in Treasury Bills (T-Bills) as rates declined while investors await rate-hike cues from the US Federal Reserve.
Investors took advantage of the short-term tenors, causing a decline in rates across all tenors compared to those from the previous auction and the secondary market.
Monday’s auction of T-bills was five times oversubscribed, with total bids reaching P76.4 billion.
National Treasurer Rosalia V. De Leon said the auction results reflect the behavior of investors on the Fed: “waiting for signal from Fed for rate liftoff.”
Such stance has led to a “strong bias for short term tenors,” which was “seen in the auction with sharp reduction on rates.”
De Leon added that the Federal Open Market Committee meeting on Tuesday and Wednesday and the press conference of Fed Chairman Jerome Powell will provide guidance on the movement of the short-term rates.
She also said they will also be considering the outcome of the Fed meeting in formulating the domestic borrowing program for February.
Investor expectations that the Fed will start raising interest rates were bolstered after the US inflation rate for 2021 hit a 40-year-high at 7 percent. Monetary authorities usually raise rates to stem the rise in inflation. Investors in government securities also usually want higher rates.
The preference for shorter tenors in Monday’s auction pushed rates for the 91-day T-bills lower at a 0.693-percent average rate, an 18.2 basis-point-drop from the previous auction’s 0.875 percent. The tenor attracted P27.98 billion in bids, equivalent to more than five times the P5-billion offering.
Meanwhile, rates for the 182-day T-bills averaged at 1.077 percent, down by 2 basis points from 1.097 percent. Tenders for the debt paper amounted to P27.86 billion, also more than five times the P5-billion offering.
Lastly, the 364-day T-bills capped at an average rate of 1.41 percent, slipping by 0.5 basis point from 1.415 percent. Bids for the security hit P20.53 billion, more than four times the P5-billion offering.
For this month, the Treasury is set to borrow P200 billion from the local debt market.
For this year, the national government programmed to borrow P2.47 trillion, down by nearly a fifth from P3.07 trillion this year.
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