THE national government failed to raise its full programmed domestic borrowing for September as it faced high yields in certain tenders, particularly for long-term government securities.
The state was only able to raise 67.25 percent or about P121.064 billion out of its target P180 billion from the tender of Treasury bills (T-bills) and Treasury bonds (T-bonds) this month.
Bureau of the Treasury (BTr) data showed that about half of the amount or about P61.064 billion came from awarded T-bonds while the remaining P60 billion was raised from sold T-bills.
The Treasury made a full award of all the four T-bills auctions it held for September, hitting its full programmed amount for the month.
For the T-bonds, the Treasury only made a full award once. The Treasury fell by about 49 percent in raising the programmed amount of P120 billion.
The majority of the auctions of T-bonds by the Treasury was hobbled by high asking yields from investors.
The last T-bonds tender for the month on Tuesday saw the Treasury rejecting all the bids by investors for the P30-billion three-year reissued debt paper due to elevated yields. The auction was also subscribed with total bids just settling at P27.643 billion.
The investors’ asking yields for the government security ranged between 6.25 percent and 7 percent, averaging 6.482 percent, which was higher than the secondary market benchmark level of 6.208 percent.
“The higher bid yields that were all rejected came after the more hawkish signals from local monetary officials on possible hike in local policy rates even before the next rate-setting meeting on November 16, 2023 amid inflationary pressures partly due to higher rice and oil prices recently,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an interview.
Ricafort added that the undersubscription also contributed to the rejection of all the bids for the T-bonds. He noted that the reduced demand for the T-bonds may have been caused by the upcoming retail dollar bond offering by the national government.
“Undersubscription that also leads to rejection of higher bid yields could reduce the volume of government securities/borrowings vs. program, partly as a function of elevated US/global bond yields,” he said.
GOVERNMENT’S failure to meet its target for September was despite having raised P15 billion from the tender of Treasury bills (T-bills) in Monday’s auction.
The NG was able to raise the amount from the tender of T-bills for the sixth consecutive week despite a slight uptick in yields caused by hawkish signals by monetary authorities.
The BTr made a full award of its 3-tenor T-bills last Monday that saw investors’ total offer reaching P40.2 billion, about 2.7-times higher than the programmed amount.
The Treasury accepted the bids despite average yield posting a slight uptick across all tenors driven by “more hawkish” signals from the Bangko Sentral Pilipinas (BSP) as it indicated a possible policy rate hike in November.
“T-bill yields are also higher after the latest increase in the BSP’s inflation estimates,” Ricafort told the BusinessMirror. “Total bids/demand also lower compared to the previous week, thereby also leading to higher T-bill yields.”
The average yield for the 91-day T-bills stood at 5.595 percent compared to the 5.552 percent recorded in the previous week’s tender. Nonetheless, it was slightly lower than the 5.61 percent secondary market benchmark level for the three-month government security.
The 182-day T-bills fetched an average rate of 5.968 percent higher than both the last week’s yield of 5.939 percent and the secondary market’s 5.944 percent.
Meanwhile, the 364-day T-bills’ average yield was at 6.119 percent, up from last week’s 6.073 percent. It was also slightly higher than the secondary market benchmark rate of 6.096 percent.
The 91-day T-bills fetched a total bid of P10.045 billion while the 182-day and 364-day debt papers recorded P16.28 billion and P13.877 billion in offers, respectively.
The Treasury was successful in making a full award of all its T-bills auction for the month as investors’ asking yields eased and well-within acceptable levels. The Treasury will hold its last auction for September on Tuesday with a 3-year P30-billion Treasury bonds tender.