Treasury selling P325-B debt paper in Q2

The Bureau of the Treasury is selling P325 billion worth of government securities from April to June, a bigger volume than the first-quarter domestic borrowing program, with smaller weekly offerings to make them more appealing to investors.

In a memorandum to government securities eligible dealers issued by National Treasurer Rosalia V. de Leon on March 26, the Treasury also scheduled weekly auctions for both bills and bonds in the second quarter.

In the past, the auctions for treasury bills and bonds were held by turns one week after another.

In all, the Treasury plans to issue P195 billion in bills on top of P130 billion in bonds.

De Leon said the recent auctions showed a market preference for the short end of the curve, hence a bigger total volume for treasury bills.

The Treasury will auction P15 billion in bills—P5 billion in 91-day, P4 billion in 182-day and P6 billion in 364-day—over the next 13 weeks.

The weekly treasury bill volume, however, was cut from P20 billion from January to March.

As for bonds, the Treasury will offer three-, five-, seven-, 10-, and 20-year IOUs during the April to June period.

The volume of weekly treasury bonds offerings was also reduced to P10 billion from P20 billion in the first quarter.

De Leon noted that when the volumes were “too high” just like during the first quarter, the auctions tended to be undersubscribed alongside high throw-away bids.

In a statement, the Treasury said that “the modification in the issuance program is calibrated based on prevailing market conditions, auction results during the first quarter, and domestic and external market events.”

From January to March, the Treasury fully awarded only one bills auction, rejected all bids during three bills and bonds auctions, while partially awarding the rest of the offerings.

The Treasury capped most bids during the first three months due to rising yields.

“Furthermore, the Treasury crafted the issuance program in close coordination with the market to maximize its participation in the fund-raising of the national government,” it added.

De Leon said that they expected more market participation in the second-quarter auctions as well as good rates, especially as the Bangko Sentral ng Pilipinas constantly and consistently allayed market concerns on inflation.