MANILA, Philippines - The Bureau of the Treasury sold P7.5 billion worth of 91, 182 and 364-day Treasury bills (T-bill) in an auction yesterday on the back of strong demand for government debt papers.
Yields on all three tenors declined, as investors did not feel the need to charge a higher premium for their money because of the government’s strong cash position.
The 91-day T-bill fetched an average rate of 1.800 percent, lower by 20.8 basis points than the previous rate of 2.008 percent.
Total tenders for this paper reached P5.8 billion, more than five times the programmed debt sale of P1 billion.
The 182-day T-bill, meanwhile, fetched an average rate of 2.117 percent, also down by 5.5 basis points from the previous rate of 2.172 percent.
Total tenders for the paper reached P6.725 billion, out of an offer of P2.5 billion.
The yield on the 364-day T-bill declined to 2.279 percent or 20.9 basis points down from the previous rate of 2.488 percent.
For this paper, investors tendered P8.165 billion, out of the planned debt sale of P4 billion.
Deputy Treasurer Eduardo Mendiola said market investors gave a good price for yesterday’s papers because of manageable inflation.
Inflation rate dipped to 2.8 percent in June from 2.9 percent in May, according to the latest data from the National Statistics Office.
The June inflation brought year-to-date inflation at three percent, falling at the lower end of Philippine central bank’s three-to-five percent target for 2012.
Mendiola said some investors are also expecting the Bangko Sentral ng Pilipinas (BSP) to cut its key policy rates on Thursday, currently at four percent for the overnight borrowing rate and six percent for the overnight lending rate.
“This may have been considered by the market in pricing today’s auction,” he said.
He said investors also know that the government has a very strong cash position.
“The government has consistently shown that is has a very good cash position. We even reduce the size of our borrowings. The market got the message. All of this really boils down to the government’s cash position. We have shown them very clear direction,” Mendiola told reporters after the auction.
Yesterday’s debt sale is part of the third quarter borrowing program of P108 billion, higher than the previous quarter’s program of P106.5 billion.
The government relies on local and foreign borrowing to fund its budget deficit, which is expected to hit P279 billion this year. - By Iris C. Gonzales