The Bureau of the Treasury reported mixed results in its latest Treasury bills (T-bills) sale on Monday, with the auction committee awarding in full the 91-day security, but only partially awarded the 182- and 364-day tenors.
Deputy Treasurer Erwin D. Sta. Ana said the various government securities eligible dealers (GSEDs) continued to lean toward the short-dated 91-day IOU, with bids twice oversubscribed compared to the offer of only P5 billion.
“Well, the offers came in at the shortest tenor. Basically our GSEDs favor the shortest tenors on issue,” Sta. Ana told financial reporters.
He further said the market may have already priced in the looming rate hikes earlier indicated by the US Federal Reserve System (the Fed), as well as the anticipated of domestic inflation, among other factors.
“We think that it’s about the hawkish stance of the Fed. There are still, I think, reportedly three rate-hike cycles still on the table. Of course there’s a new development [from the] geopolitical perspective in Syria [that the] market is also factoring. Also the inflation picture domestically. That’s why there’s a little bit of preference on the 91-day,” Sta. Ana
quickly added.
The auction committee sold only the full P5 billion worth of 91-day T-bills, although bids aggregated P11.527 billion. This helped move the rate for the IOUs 14.7 basis points higher to 3.493 percent, from 3.346 percent.
For the182-day T-bills, the auction committee partially awarded P2.080 billion worth of the aggregate P4 billion on offer. Investor interest on the six-month paper failed to lift off as the security received bids worth only P3.300 billion. Also as a consequence, the tenor averaged 47.8 basis points higher to 3.684 percent, from 3.206 percent at the previous auction.
The 364-day IOUs were similarly only partially awarded as the committee sold no more than P1.735 billion to the GSEDs instead of the full P6 billion. This translated to undersubscription aggregating only P3.435 billion.
The rate for the security proved 39.6 basis points higher than the previous auction rate of 3.434 percent, from 3.830 percent.
Sta. Ana said the Treasury’s cash position is well cushioned at the moment, giving it some leeway in terms of partially awarding or rejecting bids from the market.
“Well, we still sit comfortably with our cash position, so I think we have some leeway with respect to the bids submitted by our GSEDs. But, at the end of the day, we are consulting with them, we are talking to them quite regularly so that we would know what the feedback is from the market side,” he said.