The Bureau of the Treasury (BTr) awarded in full all tenors on offer at the latest Treasury bills (T-bills) sale on Monday amounting to P20 billion on the back of strong market appetite for shorter-dated government securities.
According to National Treasurer Rosalia V. de Leon, the BTr saw healthy market appetite in its first T-bills sale for this year, with total tenders amounting to P50.1 billion from an offering of only P20 billion.
De Leon also said the yield for both the six-month and one-year T-bills fell at the maiden sale on account of a so-called base effect.
“Basically, we see the yields coming down given the very strong appetite coming out of the market for short tenor,” de Leon told financial reporters at the conclusion of the auction sale.
The 91-day tenor, while sold at the full amount of P9 billion, attracted tenders amounting to P22.835 billion. The auction committee rejected P13.835 billion worth of offers. As a result, the three-month tenor averaged 2.23 percent, higher by 8.5 basis points from only 2.14 percent at the previous auction.
The 182-day tenor was similarly sold at the full amount of P6 billion after attracting tenders totaling P13.930 billion. The six-month tenor averaged 2.51 percent on Monday, higher by 4.4 basis points from 2.56 percent set at the previous auction.
The 364-day tenor was also sold in full, with the auction committee receiving tenders amounting to P13.350 billion. The one-year IOUs averaged 2.84 percent, higher by 10.3 basis points from 2.95 percent at the previous auction.
De Leon said the preference for shorter-dated tenors is fueled by expectations of an interest-rate hike by the US Federal Reserve system (the Fed), among other influences.
“There are also speculations that the Bangko Sentral ng Pilipinas will tighten two to three [times this year]. At the same time, there’s much liquidity because they removed the 28-day [tenor] under the term deposit facility [of the BSP] so there’s a huge appetite for short tenor maturities,” she quickly added.
The BTr said the government anticipates selling ROPs, or dollar-denominated bonds, soon. ROP is shorthand for the sovereign, or the Republic of the Philippines.
De Leon reiterated that the BTr is watching the global bond markets closely for opportunities to tap the potential for comparatively cheap foreign financing no matter that the economic managers would rather borrow from domestic creditors.
A tenor of 10 to 25 years is being eyed for the global bond issuance with around six underwriters, according to de Leon.
“The tenor we still have to finalize with our underwriters, with our syndicate team. It depends on how we see the market going for us, so if we see very good reception for the issuance, then we will pull the trigger. Otherwise, we’re still watching, particularly the news coming out in the US because of the movement coming out of US Treasuries also,” she said.