Sustained robust market demand for government securities made the Bureau of the Treasury award all of the P15 billion in treasury bills offered Monday.
The Treasury sold P6 billion in 91-day IOUs at an average rate of 2.374 percent. Tenders for the three-month debt paper reached P17.443 billion.
The Treasury also accepted P5 billion in 182-day T-bills at 2.606 percent. Investors tendered P11.235 billion for the six-month IOUs.
As for the 364-day treasury bills, P4 billion were awarded at an annual rate of 2.799 percent, out of the P6.665 billion in bids.
In all, tenders totaled P35.34 billion, making the auction twice oversubscribed.
“Auction results revealed strong demand for the t-bills with average rates almost steady ahead of the FOMC meeting within the week wherein it could raise US policy rates,” the Treasury said in a statement, referring to the policy-setting Federal Open Market Committee’s meeting on March 14 to 15.
US Federal Reserve officials expect three interest rate hikes this year to bring up the rate to 1.4 percent by end-2017, as US President Donald J. Trump’s promises to jack up infrastructure spending while slashing taxes are seen to accelerate inflation.
The auction results showed the market’s “preference for short tenors,” Deputy National Treasurer Erwin D. Sta. Ana told reporters after the auction. “It’s also an indication that the system is pretty liquid.”
Also, “trusts are going to be out of the BSP facilities come July this year, so I think it’s helping us in the government securities side and that actually helps in terms of the demand of our securities,” Sta. Ana added.
Last October, the Monetary Board, the BSP’s highest policymaking body, moved to discontinue trust entities’ placements in the overnight as well as term deposit facilities starting July this year.
“The BSP deposit facilities serve as a monetary policy instrument for managing domestic liquidity in the financial system. It is not intended to become an investment outlet of banks and trust entities,” the BSP said in a Nov. 18 memorandum.