Investors scramble to buy all P 10-B IOUs in last T-bills auction for the year

The market on Monday flocked to the Bureau of the Treasury’s penultimate auction for 2021 and snapped up all of the P10 billion offered to replenish their government securities holdings.

The Treasury raised P2 billion from the benchmark 91-day, P3 billion from the 182-day, and P5 billion from the 364-day debt paper.

The 91- and 182-day IOUs fetched lower average rates of 1.125 percent and 1.428 percent, respectively. Last week, their yields were 1.155 percent and 1.443 percent.

The 364-day’s annual rate, meanwhile, inched up to 1.649 percent from 1.643 percent previously.

National Treasurer Rosalia de Leon said there was “strong participation, with today’s auction being the last for T-bills.”

The Treasury will still auction off P20 billion in reissued seven-year T-bonds on Tuesday, Dec. 14. It rejected tenders for longer tenors last week due to rising bid rates.

De Leon had said government securities eligible dealers (GSEDs) preferred shorter debt amid uncertainties wrought by a still above-target headline inflation in the Philippines and the US Federal Reserve’s unwinding of its bond-buying program.

On Monday, De Leon said GSEDs looked for securities to park their funds amid maturing P28.6-billion debt paper, including the P6.6 billion in one-year premyo bonds sold last year.

After raising P360 billion from 5.5-year retail treasury bonds (RTBs) this month, the Treasury will no longer offer premyo bonds as it needs to keep the debt-to-gross domestic product (GDP) ratio at the targeted 59.1 percent by end-2021.

As debt accumulation outpaced economic growth, debt-to-GDP—which reflects a country’s capability to repay obligations—jumped to a 16-year high of 63.1 percent as of end-September, above the 60-percent threshold deemed by credit rating agencies as manageable among emerging markets like the Philippines.

De Leon said the Treasury was “making plans, but will see if January 2022 is possible” for another premyo bond offering. During the Treasury’s virtual RTB roadshows, many Filipinos living or working abroad expressed interest in buying premyo bonds once more.