Treasury sells P23B in T-bills as demand remains strong

The Bureau of the Treasury on Monday (March 2) sold P23.2 billion in T-bills, exceeding the P20-billion total offering amid strong demand.

The Treasury awarded P6 billion in the benchmark 91-day IOUs at 3.013 percent, slightly up from 3.003 percent last week.

It also sold P6 billion in 182-day debt paper at 3.324 percent, down from 3.365 percent previously.

For the 364-day treasury bills, P11.2 billion were awarded at an annual rate of 3.684 percent (down from 3.787 percent) as the Treasury accepted P6.4 billion in non-competitive bids—double the usual P3.2 billion for the weekly P8-billion offering.

While the average rate of the 91-day T-bill inched up, all three tenors were sold with rates below those in the secondary market, National Treasurer Rosalia V. de Leon told reporters after the auction.

Bids totaled P60.4 billion, making the auction over three times oversubscribed.

De Leon partly attributed the robust demand for short-dated securities to the lingering adverse impact of the COVID-19 outbreak, which had been bringing down treasury rates globally.

Also, De Leon pointed to market expectations of interest rate cuts beyond the 50 basis points earlier announced by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

The rate cut was aimed at further supporting and stimulating the economy amid the COVID-19 impact and signalled a readiness by the government to provide push to the market.

Another reason for the strong demand for T-bills was the “still enough” liquidity in the financial system, De Leon added.

It helps that the government will get bulk, or 75 percent, of its borrowings locally and the Treasury has kept a wait-and-see attitude on planned offshore bond issuances, De Leon said.

Edited by TSB