Short-dated securities auctioned off on Monday in the form of Treasury bills (T-bills) posted rates rising across the board, their combined cost having risen 6.9 basis points from when they were last sold by the Bureau of the Treasury (BTr).
The auction outcome indicated a market that remains liquid and by this token able to support the growth projections of the economic managers and, at the same time, betrays a market that prefers to stay only for the short haul.
The 91-day T-bill was sold in full at P6 billion and was more than two times oversubscribed as tenders amounted to P17.443 billion. This compelled the auction committee to reject P11.443 billion worth of offers.
This also set the 91-day T-bill rate to 2.374 percent, higher by 1.4 basis points compared to the 2.36 percent fetched at the previous auction.
“The auction was quite a success today. All tenors were fully subscribed and we received bids totaling P35 billion versus the offer size of P15 billion. So this represents, I think, the market’s preference for short tenors and, of course, it’s also an indication that the system is pretty liquid,” Deputy Treasurer Erwin D. Sta. Ana told financial reporters.
The 182-day tenor was also met by strong demand from the market, as the committee awarded all P5 billion worth on Monday. The tenor was more than twice oversubscribed at P11.235 billion, forcing the committee to reject 6.235 billion. The security averaged 2.606 percent, higher by 1.9 basis points compared to the previous rate of 2.587 percent.
“It’s expected, given the preference for shorter-dated notes. We feel this was within our internal estimates also, so we’re pretty aligned with the results. Trusts, I understand, are going to be out of the Bangko Sentral ng Pilipinas [term deposit] facilities come July this year, so I think [they’re] helping us in the government security side and that actually helps in terms of the demand of our securities,” he added.
The 364-day tenor was awarded in full (P4 billion), with tenders reaching P6.665 billion and the auction committee having to reject P2.665 billion. Its rate was set at 2.799 percent, higher by 3.6 basis points compared to 2.763 percent at the previous auction.
“Auction results revealed strong demand for the T-bills with average rates almost steady ahead of the Federal Open Market Committee [Fomc] meeting within the week wherein the FOMC could raise the policy rates,” the BTr said.
Sta. Ana said the market is also keenly interested on how the FOMC votes on Wednesday, and the probability of a rate hike by then.
“Well, there’s, of course, that FOMC meeting on March 15, so that is what the market has been anticipating for quite some time. The labor data coming out of the US are actually conducive to such a move and, of course, the probability of a rate hike has been close to a hundred percent. So that is the event that all participants are actually looking after right now,” Sta. Ana said.