Treasury sees lower rates as it rejects bids for 1-year bills

The Bureau of the Treasury on Monday sold only P7.1 billion or less than half of its P15-billion T-bills offering Monday as it deemed yields could still go down amid easing inflation and ample cash buffer given the government’s underspending in the first quarter.

The Treasury awarded all P4 billion in the benchmark 91-day IOUs at an average rate of 5.608 percent, down from 5.614 percent last week.

It also sold P3.1 billion in 182-day bills out of the P5-billion offering, with the rate capped at 5.996 percent, up from 5.987 percent a week ago.

However, the Treasury rejected all bids for the P6 billion in 364-day debt paper.

Tenders totaled P26.6 billion across the three tenors.

National Treasurer Rosalia V. de Leon told reporters after the auction that the Treasury felt there was still room for rates to decline amid a downtrend in headline inflation.

The rate of increase in prices of basic commodities eased to a 15-month low of 3.3 percent in March, bringing the three-month average to 3.8 percent, within the government’s target range of 3-4 percent.

Also, De Leon said cash remained “bountiful” as government spending slowed at the start of year due to the impasse on the 2019 national budget.

To recall, the government operated under a reenacted budget during the first quarter as this year’s appropriations stalled in Congress as lawmakers squabbled over alleged pork barrel insertions.

The delay in passage of the P3.7-trillion budget for 2019 prevented the government from spending more than P1 billion a day on public goods and services from January to March, De Leon noted, even as revenue collections jumped by over a tenth during the three-month period.

“We have good revenues, we have been having very healthy auctions in terms of the fundraising, but [we had] lower spending so far for the first quarter and that is attributed to the nonpassage of the 2019 budget. So we’ve been able to have a very strong cash position,” she said.