Treasury bills down as investors swarm auction

MANILA, Philippines – A wash with cash, investors swarmed yesterday’s Treasury bill (T-bill) auction, prompting the Bureau of the Treasury (BTr) to increase the size of the awards for all three tenors.

The yield of the 91-day T-bill dropped to 3.850 percent, or 44.8 basis points lower than the previous rate of 4.298 percent.

Total tenders for this paper reached a whopping P12.310 billion or more than four times the upsized offer of P2.8 billion.

Originally, the government’s auction committee only made a full award of the paper amounting to P2 billion but strong demand prompted the officials to increase the award to P2.8 billion.

The 182-day T-bill fetched a rate of four percent, lower by 47.8 basis points than the previous rate of 4.478 percent.

The auction committee awarded P4.2 billion worth of the six-month paper, upsized from the original award of P3 billion because of strong demand. Total tenders reached P15.595 billion.

Similarly, the 364-day paper fetched a rate of 4.300 percent, down 25 basis points from the previous rate of 4.550 percent.

Total tenders reached P15.780 billion as the government awarded P4.9 billion worth of the paper, from the original amount of P3.5 billion.

National Treasurer Roberto Tan said it was very advantageous for the government to accept the bids submitted by banks during yesterday’s auction.

“The market is very liquid. There are maturities worth P14 billion,” Tan told reporters.

He said people want to invest in available T-bills because they are safe havens.

The credit rating upgrade by Moody’s Investors Service also contributed to the positive sentiment.

“The upgrade brought in a lot of positive mood,” Tan noted.

Last July 23, Moody’s raised its sovereign rating for the Philippines to Ba3 from B1 previously, noting the country’s high degree of resiliency against external shocks.

A Ba3 rating is three notches below investment grade while a B1 rating is four notches below investment grade.  The outlook on the ratings is stable. 

Moody’s said the country’s financial system and external payments position exhibited a high degree of resiliency in the face of the global financial and economic crises. International reserves of the central bank are at a historical high and exceptional policy measures have not been required to shield the banking system from global shocks, it said.

Moody’s also noted that the Philippines has maximized the reopening of global credit markets.

Last July 13, the government successfully sold $750 million in global bonds to foreign investors to finance a larger deficit.

“The reopening of global credit markets this year has also been opportunistically exploited by the Philippines in its effort to minimize both a crowding-out of the domestic markets and a rise in government bond yields,” Moody’s has said. –Iris C. Gonzales, Philippine star