BTr awards P15B in T-bills

The Bureau of the Treasury (BTr) on Monday made a partial award of treasury bills worth P15.5 billion or just over three-fourths of the P20-billion offering, mainly on lingering uncertainty over longer tenors due to a potential interest rate hike in the United States.

For the benchmark 91-day T-bills, the BTr accepted the offering size of P8 billion from a total of P18.32 billion in tenders at 2.142 percent, up 9.3 basis points from the previous month’s auction.

Also, P6 billion in 182-day debt paper were accepted at an average rate of 2.35 percent, 9.8-basis points higher than that of last month. Tenders for the six-month IOU reached P10.933 billion.

National Treasurer Roberto B. Tan told reporters after the auction that the robust demand for short-term debt paper was a “pulse of the confidence of the market.”

But it was different story for the 364-day T-bills, which were undersubscribed with P5.056 billion in tenders.

The BTr decided to award only P1.5 billion, or just a fourth of the P6-billion offering, at 2.512 percent, up 8.1 basis points.

“As before, there remains uncertainty on the longer tenors, particularly for T-bills,” Tan noted. “One year may be a long time to give a confident prediction of what will happen.”

The market is concerned about a possible rate hike by the US Federal Reserve, which may happen in September as pundits ruled out any adjustment during the US Fed’s meeting this month.

While the domestic market is in good shape, uncertainty over developments overseas also impact locally, Tan pointed out.

Despite these external developments, the BTr is prepared for a planned debt swap by midyear, Tan said.

“We would like to do it [the debt swap] before any Fed move, in anticipation of a Fed move by September,” he said.

Last week, Tan said a debt swap by the middle of the year was aimed at getting rid of illiquid ISINs to put more into deep-volume securities.

ISINs mean International Securities Identification Numbers, which identify specific securities.

Tan told the Inquirer that the BTr had already requested President Aquino to give its go-ahead for the planned peso-denominated debt swap, after which it would seek the approval of the Bangko Sentral ng Pilipinas’ Monetary Board.

The BTr will then solicit inputs from the private sector to finally arrive at the “most attractive” option, Tan had said.

While the volume and the number of tenors are yet to be determined, the BTr wants a “benchmark-sized” issuance, according to Tan.