Benchmark rates mixed as 1Q deficit seen below ceiling

BENCHMARK interest rates were mixed at Monday’s auction of Treasury bills, as the government said its first-quarter budget deficit stayed below its ceiling.

The auction committee upsized its P8 billion T-bill offering to P8.6 billion.

The rate on the 91-day T-bill fell 55 basis points to 3.82 percent. Total tenders reached P6.304 billion, leading the government to award P2.1-billion worth of the three-month debt papers, or higher than the P1.5 billion programmed for the day.

It was a different story for the 182- and 364-day T-bills, the rates for which inched up to 4.036 percent and 4.408 percent, respectively, from the previous 4.030 percent and 4.385 percent.

“These are sideways movement in the market or within the ideal bracket of interest that the government is willing to give the investors,” Finance Undersecretary Gil Beltran, who chaired Monday’s auction, said.

“These rates are significantly lower than the secondary market, thus, we better take it,” he said.

At the secondary market, the 91-day rate was last quoted at 3.92 percent, while the 182-and 364-day rates were quoted at 4.07 percent and 4.44 percent, respectively.

The auction committee fully awarded the P3-billion worth of six-month papers on offer, even as banks were willing to buy as much as P8.710 billion.

It also awarded in full the P3.5 billion one-year IOUs on offer, despite market pressure to sell P6.654 billion.

For this week, the government has maturing debt worth P13.855 billion.

Beltran said the Department of Finance is confident that its fiscal gap in the first quarter would be narrower than the P110.9 billion program, as the collection over performance of the Bureaus of Internal Revenue (BIR) and of Customs likely offset the government’s failure to sell a number of assets as scheduled.

“The BIR has reported a total of P16 billion excess against its target, while the [Customs] has likewise outperformed its required collection to P8.7 billion,” Beltran said.

“It is possible that we got better than P110.9 billion given the over-performance of BIR and [Customs] which could easily outweigh the impact of non-privatization,” he said.

The government had planned to sell its shares in PNOC-Exploration Corp. and the 103-hectare property of Food Terminal Inc. in Taguig City. The finance department had also lined up the long-term lease of the Fujimi property in Tokyo, Japan.

At end-February, the government’s budget deficit rose by 4.9 percent to P70.3 billion from P67 billion a year ago mainly because of lower income from treasury operations.

For the whole year, the government has set its deficit ceiling at P293 billion, or 3.5 percent of the Philippine economy. –KATRINA MENNEN A. VALDEZ Reporter, Manila Times