THE Bureau of the Treasury (BTr) fully awarded all tenors in its latest auction for Treasury bills (T-bills) on Monday with P15 billion, with investors seeing reasonable liquidity in the domestic market.
Deputy Treasurer Erwin D. Sta. Ana told reporters the auction committee, seeing a healthy demand for the government security, decided to fully award all tenors.
“We are thinking . . . that there is still reasonable liquidity going on, so the dealers are just waiting for some updated information on whether they should come into the auction or wait for a little bit more time. But I think given what I said about the 91-day [tenor], [it] looks like they are getting some clarity at least with respect to the very short-term horizon of interest rates,” Sta. Ana said.
The 91-day tenor was awarded P4 billion with tenders for the IOU reaching P7.317 billion. The average annual rate was set at 4.952 percent. This would have showed an 11.5 basis point contraction if the BTr fully awarded the previous T-bill auction for the 91-day tenor.
The 91-day tenor during the previous auction in October 15 was rejected by the auction committee due to high bid rates, but if it had awarded the full P4 billion on offer, the annual average rate would have spiked to 5.067 percent.
“Total tenders is about P25 billion so that’s quite a good turnout and that’s the reason why the committee decided to fully award on all tenors. We saw some correction on the 91-day because if you compare the rates from the previous fully rejected auction, it’s a little bit lower than last weeks,” he added.
The 182-day tenor was fully awarded P5 billion with tenders reaching P7.343 billion, and the average annual rate capped at 6.059 percent. This posted a 16.5 basis point increase compared to the previous auction rate of 5.894 percent.
Bids for the 364-day tenor reached P9.850 billion with the auction committee awarding the full P6 billion on offer; the average annual rate for the security settled at 6.489 percent. This showed a 23.3 basis point expansion compared to the 6.256 percent set in the previous auction.
“So we are thinking that is also an indication some view it as inflation peaking already. So it’s a good sign. So for the 182- and 364-day, I think the increments are quite reasonable from our end,” he said.
Sta. Ana also told reporters that the BTr is looking to issue Retail Treasury Bonds (RTBs) either in the fourth quarter of this year or in the first quarter of 2019. No amount was decided upon yet by the Treasury, which is looking at either issuing a 3- or 5-year RTB.
“We are looking at the fourth quarter or first quarter, so we are looking at the market conditions also and where interest rates will be heading based on the inflation print,” he added.