The Bureau of the Treasury (BTr) posted mixed results in the sale of Treasury Bills (T-bills) on Monday when it partially awarded a total of P16.5 billion instead of the full P20-billion lot. Officials said the government securities eligible dealers (GSEDs) still held back from pouncing on the full offer as they try to second-guess the US Federal Open Market Committee (FOMC) and President Donald J. Trump when he delivers the State of the Union Address of the United States.
According to Deputy Treasurer Erwin D. Sta. Ana, the auction committee fully awarded the 91-day tenor on the back of strong demand for the security, with the market clearly leaning toward shorter-dated IOUs.
The 91-day tenor was awarded in full at P9 billion, with tenders reaching P18.720 billion. The committee rejected P9.720 billion.
As a result, the 91-day T-bill rate rose 8.8 basis points higher to 2.321 percent, from the previous auction’s 2.233 percent.
“We saw that much of the demand came at the shortest end, so we doubled the size on that one. But, for the others, it was a little bit over the offer size.
We think liquidity. I think the market is waiting for some leads. There are critical events in the US this week,” Sta. Ana told financial reporters.
The lead events include the FOMC meeting, the State of the Union address of Trump and that Treasury rates are trending higher.
“The market is actually factoring those out,” Sta. Ana said.
The BTr also decided on a partial award for both the six-month and one-year T-bills on the back of high rates offered by the market.
“It’s really based on our internal reading on where the rates are with respect to those tenors, and we actually surveyed our GSEDs and, basically, we are putting it at levels where we also see them coming in. We actually just cut it where we think the rates should be,” he said.
The 182-day tenor was sold for a total of only P4.615 billion, although tenders actually totaled P6.965 billion. Another P2.350 billion, was rejected by the auction committee.
As a result, the six-month T-bill rate moved 5.8 basis points higher to 2.577 percent, from the 2.519 percent at the previous auction.
Tenders for the 364-day tenor reached P5.853 billion with the auction committee partially awarding only P2.853 billion and rejecting P3 billion. The one-year T-bill rate averaged 2.925 percent, or 7.6 basis points higher the previous auction’s 2.849 percent.
Total tenders for the security reached P31.5 billion versus the P20 billion on offer.
The FOMC meeting is scheduled to happen this week, the last for the Chairman of the Board of Governors of the Federal Reserve System Janet Yellen.
The US State of the Union Address will happen on January 30.