THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates barely moved after the Bangko Sentral ng Pilipinas (BSP) said it will cut banks’ reserve requirement ratios (RRRs) further.
The Bureau of the Treasury (BTr) raised P22 billion as planned from the T-bills it auctioned off on Monday as total bids reached P83.711 billion, almost four times as much as the amount on offer and higher than the P56.275 billion in tenders recorded on Feb. 17.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as tenders for the tenor reached P24.475 billion. The three-month paper was quoted at an average rate of 5.329%, inching up by 1.1 basis points (bps) from the 5.318% seen at the previous week’s auction, with accepted rates ranging from 5.28% to 5.358%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P25.936 billion. The average rate of the six-month T-bill stood at 5.672%, 1 bp higher than the 5.662% fetched the previous week. Tenders accepted by the BTr carried yields of 5.64% to 5.693%.
Lastly, the Treasury raised the programmed P8 billion via the 364-day debt papers as demand for the tenor totaled P33.3 billion. The average rate of the one-year debt decreased by 2.6 bps to 5.754% from 5.78% previously, with bids accepted having rates of 5.74% to 5.77%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.2933%, 5.592%, and 5.7889%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
T-bill yields were mostly steady as the market is still assessing the potential impact of the RRR cuts, which will take effect next month, a trader said in a text message.
“Treasury bill average auction yields mostly corrected slightly higher for the third straight week … after the comparable short-term PHP BVAL yields were mostly slightly higher week on week,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Ricafort said yields on government securities have climbed following the BSP’s surprise decision to pause its easing cycle this month, but its announcement of further cuts in banks’ reserve ratios partially offset the rise in T-bill rates this week.
The RRR is the portion of reserves that banks must hold onto rather than lending out.
On Friday, the BSP said it will reduce the reserve requirement ratio for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 200 bps to 5% from 7% effective March 28.
The RRR for digital banks will be cut by 150 bps to 2.5%, while that for thrift banks will be slashed by 100 bps to 0%.
Rural and cooperative banks’ RRR has been at 0% since October, which was the last time the BSP cut lenders’ reserve ratios.
“The BSP reiterates its long-run goal of enabling banks to channel their funds more effectively toward productive loans and investments. Reducing RRRs will lessen frictions that hinder financial intermediation,” the central bank said.
Monday’s T-bill auction was the last one for this month. The BTr raised P93.6 billion via T-bills in February, higher than the P88-billion plan, as it upsized its award at one auction.
On Tuesday, the BTr will offer P30 billion in reissued 20-year Treasury bonds with a remaining life of 19 years and three months.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy
