Banks swamp T-bill auction with P38B worth of bids

The Bureau of the Treasury Monday  sold all P20 billion in treasury bills offered as it also considers increasing borrowings in light of the incoming Duterte administration’s plan to ramp up spending.

The auction was almost twice oversubscribed with more than P38 billion in tenders for the securities.

The Treasury accepted P8 billion in 91-day IOUs maturing on Sept. 7 at an annual rate of 1.588 percent, down from 1.674 percent a month ago.

Also fully awarded were P6 billion in 182-day debt paper that will mature on Dec. 7, whose yield eased to 1.617 percent from 1.65 percent in the previous auction.

The Treasury also sold P6 billion in 364-day securities maturing on June 7 next year, although the rate rose to 1.925 percent from 1.866 percent.

“The bids have been quite aggressive, comparatively. I think there were some trading hesitancy last week because of the anticipated auction by the Bangko Sentral ng Pilipinas,” National Treasurer Roberto B. Tan told reporters, referring to the term deposit facility (TDF) to be auctioned on Wednesday.

Besides the TDF, the BSP last Friday also conducted its first-ever auction of overnight reverse repurchase (RRP) facility under the implementation of the interest rate corridor (IRC). Total tenders reached P574.07 billion, exceeding the P305-billion offering, as banks swarmed one of the two auctions under the IRC aimed at mopping up excess liquidity and tempering volatility in market rates by moving them toward the policy rate.

Tan said the Treasury’s auctions and those to be conducted by the BSP would not compete for the market. “[They are] complementing each other in terms of price efficiencies. The market is adjusting very well,” he said.

On reports that the Duterte administration planned to ramp up government expenditures and widen the budget deficit to 3 percent of gross domestic product (GDP) from the Aquino administration’s annual program of 2 percent, Tan said the Treasury was doing a scenario-building for such fiscal policy.

“We have to sit down with the incoming economic managers and this will be discussed with them. Once we get instructions, we will do the analysis and, of course, pursue the policy that the economic team will be adopting for the new administration. We will be supportive and pursue the policy of the new economic team once they have formally instructed us to develop the new strategy,” Tan said. Ben O. de Vera