BTr fully awards T-bill offering amid rate uptick

By Joann Villanueva

July 23, 2018, 7:38 pm

MANILA -- The Bureau of the Treasury’s (BTr) auction committee on Monday made a full award for three tenors of Treasury bills (T-bills) even with the uptick in rates for the longer tenor debt papers.

The rate of the six-month paper rose to 4.235 percent from 4.185 percent during the auction last July 16. This is lower than the 4.3675 percent in the secondary market during the morning session.

The average rate of the one-year T-bill went up to 4.809 percent from 4.767 percent in the previous session. In the secondary market, this tenor fetched a lower rate of 4.6467 percent this morning.

On the other hand, the rate of the bellwether 91-day paper declined to 3.219 percent from 3.291 percent in the previous auction. It stood at 3.2354 percent in the secondary market Monday morning.

Bids surpassed the offering for all tenors.

The three-month paper was offered for PHP4 billion but tenders reached PHP10.43 billion. Tenders for the six-month paper totaled PHP8.996 billion, higher than the PHP5 billion offering. Bids for the one-year paper amounted to PHP13.489 billion, higher than the PHP6 billion offering.

National Treasurer Rosalia de Leon told reporters after the auction that they fully awarded the debt papers since the rates are within levels the auction committee had anticipated.

“And also maybe this is coming from the very strong pronouncement of the Governor last Friday,” she said, referring to the statement of Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. that the central bank’s policy-making Monetary Board (MB) is considering another rate hike when the Board meets on August 9.

The Board already hiked the BSP’s key rates by a total of 50 basis points last May and June to ensure price stability amid rising inflation.

De Leon said Espenilla’s statement indicated “very strong action to be taken to be able to temper inflation expectations and bring it back to the inflation path, particularly next year.”

In the first half of the year, the rate of price increases averaged 4.3 percent, higher than the government’s two to four percent target for 2018.

Last June alone, inflation surged to a multiyear high of 5.2 percent from month-ago’s 4.6 percent on faster inflation rate of the heavily-weighted food and non-alcoholic beverages index and the alcoholic beverages and tobacco index.

Aside from the monetary policy factor, de Leon said investors also noted BTr’s report about the government’s fiscal performance in the first half of the year.

BTr, on Monday, reported about the 20 percent year-on-year rise of both the government’s revenues and expenditures.

Total revenues as of end-June this year reached PHP1.41 trillion, higher than year-ago’s PHP1.176 trillion and the PHP1.304 trillion programmed for the six-month period.

Expenditures during the same period amounted to PHP1.603 trillion, higher than the PHP1.33 trillion in end-June 2017, as well as the PHP1.569-trillion program for January to June this year.

Budget deficit to date stood at PHP193 billion, higher than year-ago’s PHP154.5 billion deficit but lower than the PHP264.3 billion programmed for the six-month period.

“We see that this revenue performance of both BIR (Bureau of Internal Revenue) and BOC (Bureau of Customs) will be sustained so we are now in a very good position to calibrate our borrowings given that the performance, the collection of the two agencies will allow us to be able to calibrate and also not accept all the bids at outrageous rates if ever that would be offered by the market,” de Leon said.

Meanwhile, the National Treasurer said finance officials are set to file this Monday the application to issue Samurai bond.

She declined to say how much or what tenors will be issued but noted that Department of Finance (DOF) officials are considering three-, five- and seven-year tenors.

The final tenor would depend on market preference, which Finance officials continue to study, she added.

Finance department officials said the Philippine government plans to issue the yen-denominated debt paper in September or October this year.

The DOF earlier said five of Japan’s major financial institutions have given their full support to the Philippines’ first stand-alone Samurai bond issuance.

The issuance of the Samurai bond will be made as the government diversifies its securities investments.

Last March, the government issued its first-ever three-year renminbi-denominated Panda bond, which is issued by a non-Chinese issuer in China, amounting to RMB1.46 billion. (PNA)