The Bureau of the Treasury (BTr) made a full award on the treasury bills auctioned yesterday amid strong investor demand for the short-term IOU offering.
Total bids for all tenors reached P70.9 billion, more than 3.5 times the volume of P20 billion.
This prompted the auction committee to also open the over-the-counter window for the 364-day paper, which saw more than three times demand.
“Obviously we see liquidity going into the market. The rates were as expected, based om market feedback so we had a quite good auction,” Erwin Sta. Ana, deputy treasurer, said after the auction in the BTr office in Manila yesterday.
“It’s obvious that liquidity is around. And of course the pronouncement of the BSP (Bangko Sentral ng Pilipinas) governor of a possible second quarter cut, and possibly tracking also the US Treasuries which, over the past week or past days, have been declining,” he added.
Rates across all tenors of the treasury bills went below previous auction and secondary market levels.
Asked how long rates are expected to remain subdued, Sta. Ana said: “It’s difficult to say at this time how long this would be sustained but of course one major factor is the COVID-19 because it affects the global scene, because it’s starting to spread, based on news reports, and that could actually have an impact on global growth. We will see how it develops and how it affects the greater economy as a whole.”
The 91-day paper fetched a rate of 3.003 percent, 6.9 basis points (bps) lower than the previous average of 3.072 percent.
Tenders amounted to P21.596 billion, more than thrice the P6 billion offering which was fully awarded by the government.
The half-year securities posted a rate of 3.365 percent, 5.5 bps down from the previous 3.42 percent.
The government also sold P6 billion as planned with demand more than thrice oversubscribed at P21.06 billion.
Lastly, the one-year instrument fetched a rate of 3.787 percent, 4.9 bps lower than the previous average of 3.836 percent.
Tenders amounted to P28.21 billion, also more than thrice the P8 billion program.
Meanwhile, asked about the impact of COVID-19 on the government’s offshore borrowings, Sta. Ana said there has been no discussion about the possibility of delaying plans to tap the overseas market due to the virus outbreak.
“We’re monitoring the situation and the impact of it globally and of course the markets.
Although, we are still, for example, the US dollar, it’s still being considered, we’re still doing some monitoring on that. But on the other markets, we have already stated that it could probably be anytime within the first half of the year. That hasn’t changed as of now. It’s all on the table, possibly first half,” Sta. Ana said.
“Of course, we are biased on the domestic funding wherein we have proven based on RTB (retail treasury bond) result that we can actually generate ample funding from domestic sources. We have to balance it out once we are ready to decide and depending on where the market needs us in the second quarter,” he added.
