The Bureau of the Treasury sold all the P15 billion in T-bills it offered Monday at rates that fell across the board amid a “very liquid” market after the Bangko Sentral ng Pilipinas reduced the volume of its term deposit facility (TDF).
In a statement, the Treasury said it made the full award due to “strong demand” for the P6-billion 91-day, P5-billion 182-day and P4-billion 364-day government securities.
“The 91, 182, and 364-day T-bill rates settled at an average of 2.088 percent, 2.564 percent and 2.92 percent, respectively—all lower from the previous auction rates as well as secondary market levels,” the Treasury said.
The treasury bills auction was over thrice oversubscribed as bids totaled P52.3 billion.
“We see the very liquid tone of the market given that first, the BSP has reduced the 28-day [TDF] offer from P140 billion to P110 billion. So that’s P30-billion released liquidity,” national treasurer Rosalia V. de Leon told reporters after the auction.
“At the same time, we’ve seen that for all three tenors the rates have gone down given that we have very soft data coming out of the US, so expectations have been muted in terms of another rate hike in December,” De Leon added.
The impact of Hurricane Irma was also seen to have had “slightly moderated‘ growth prospects in the US, according to De Leon.
The BSP cut the volume of the 28-day TDF it was offering starting this month “based on the recognition that the sustained economic expansion has also given rise to higher demand for credit,” Deputy Governor Diwa C. Guinigundo had said.
“Banks are now lending more to their clients instead of placing their excess funds with the BSP. Corporates are also using their peso funds in the banks to buy foreign exchange for their import requirements; some of them have also been investing outside the Philippines,” Guinigundo said.
“Some are prepaying their external obligations,” he added. “Thus, it is the excess liquidity of the banks that has declined recently and not the domestic liquidity per se. The BSP, therefore, does not have to do as much mopping up as before because funds are being used for productive uses instead of just being parked with the BSP.”
/atm