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T-bills fully awarded as rates move sideways on US central bank taper

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates moved sideways, with investors expecting the US Federal Reserve to reduce its asset purchases faster.

The Bureau of the Treasury (BTr) raised P10 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P37.65 billion, almost four times the initial offer and higher than the P33.76 billion in bids last week, which was for a P15-billion offering.

Broken down, the BTr raised the programmed P2 billion via the 91-day debt papers from P11.38 billion in bids. The three-month T-bills fetched an average rate of 1.164%, down by 1.4 basis points (bps) from the 1.178% seen at last week’s offering.

The BTr also borrowed P3 billion as planned from the 182-day securities it offered on Monday as bids reached P13.98 billion. The average yield on the six-month T-bills went up by 0.6 bp to 1.449% from the 1.443% fetched last week.

Lastly, the government made a full P5-billion award of the 363-day T-bills as the tenor attracted tenders worth P12.35 billion. The average rate of the one-year instruments stood at 1.636%, inching up by 0.8 bp from the 1.628% seen a week earlier.

At the secondary market prior to the auction, the 91- 182- and 364-day T-bills were quoted at 1.2378%, 1.4571% and 1.6963%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction that there was strong demand for Monday’s T-bill offer following the BTr’s move to reduce its borrowing plan for December.

“Rates hardly moved even after start of Fed taper and expectations of rates heading north,” she said.

A bond trader said T-bill yields moved sideways with slight upward bias as expected.

“The bond curve has been in a bear flattening trend the past few weeks due to heightened expectations that the US Fed may tighten sooner than initially expected,” the trader said in a Viber message.

“Fears about that Omicron variant of the COVID-19 may have put a cap to further rise in yields as some investors seek solace on short-debt papers.”

Minutes of the US Federal Reserve’s recent meeting said officials want to be prepared for a quicker tapering of asset purchases if inflation remains elevated, Reuters reported.

Meanwhile, South Africa’s health minister had announced the detection of a new coronavirus disease 2019 variant, which scientists said had a high number of mutations. Several countries have started to impose travel bans after the variant was detected in more countries.

The BTr plans to raise P70 billion from the domestic market in December, or P30 billion via T-bills and P40 billion from Treasury bonds.

The government wants to raise P3 trillion from local and external sources this year to help fund a budget deficit seen to hit 9.3% of the country’s gross domestic product. — Jenina P. Ibanez

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