The government raised P20 billion from the auction of Treasury bills Monday, as investors demanded lower interest rates, according to the Bureau of Treasury.
The Treasury said it fully awarded P8 billion worth of 91-day debt instruments, P6 billion worth of 182-day papers and another P6 billion worth of 364-day bills. Treasury bills refer to government debt papers with maturity of less than one year.
“The bids have been quite aggressive, comparatively. I think there are some trading hesitancy last week because of the anticipated auction by Bangko Sentral which went well,” National Treasurer Roberto Tan told reporters after Monday’s auction.
Bangko Sentral’s auction of reverse repurchase facility was oversubscribed Friday, marking the success of the first auction under the interest corridor system.
The Treasury said interest rates on 91-day and 182-day debt instruments declined while the yield of 364-day bills rose.
The auction was oversubscribed across all tenors with total tenders of P38.052 billion, of which P20 billion was accepted.
Interest rates on the 91-day or three-month debt facilities settled at 1.588 percent, or 8.6 basis points lower than the previous rate of 1.674 percent. Tenders for the three-month debt papers reached P17.596 billion, or more than double the original offer of P8 billion.
The 182-day treasury bill rates also decreased by 3.3 basis points to 1.617 percent from the previous average of 1.65 percent. Tenders for the six-month debt facilities hit P12.176 billion, or twice the P6-billion original offer.
Meanwhile, investors bid higher rates for the 364-day debt papers, with an average of 1.925 percent. This was 5.9 basis points higher than the previous average rate of 1.866 percent. Tenders for the one-year facility amounted to P8.29 billion, slightly higher than the P6-billion original offer.
“There are many reasons for that. The outlook for one-year is probably different from six [month] and 91 days but still within the market. It was bound to be quite reasonable [and] even the array was quite balanced, from the lowest to the highest bid. I guess we reached a decision where we still had a very reasonable bid, capping that at that level and fully accepted it,” Tan said.
Tan said while Bangko Sentral already launched its interest rate corridor facility, there would be no competition between the two agencies.
“Well it doesn’t look like it. It’s complementing each other in terms of price efficiencies. The market is adjusting very well,” he said.
Bangko Sentral on June 3 received P574.072 billion total tenders for its overnight reverse repurchase facility under the IRC system. This was higher than the P305-billion original offer.
Tan said the Philippines could withstand volatilities in the external market given its strong economic fundamentals.
“The Philippines is one of the most competitive and admired right now against any economies. Without even any drastic movement in the interest rate environment, the Philippines, I am very confident, will be performing better than many other economies in comparable category,” he said.