Yields on gov’t debt start easing

Published April 4, 2022, 2:24 PM

by Chino S. Leyco

After more than a month of partial award, the Bureau of the Treasury has finally made a full award of its short-term borrowing program as interest rates eased across the board.

At Monday’s auction, April 4, yields on short-term government debt papers declined, with the returns on the 91-day Treasury bill dropped to 1.380 percent from 1.587 percent fetched last week.

Total tenders reached P29.35 billion for the P5 billion worth of three-month T-bills on offer. The auction made a full award to P5 billion.

Likewise, yield on the six-months debt paper to declined to 1.781 percent from 1.856 percent set during the failed auction on March 28. However, it is higher than the 1.607 percent when the same tenor was sold last March 21.

The government accepted all P5 billion worth of bids for the six-month IOU as banks were willing to lend up to P14.179 billion.

The one year IOU, also fell to 1.883 percent from the previous failed auction of 2.137 percent, but higher compared with 1.792 percent fetched on March 21.

The government secured the full award of its borrowing for the week, amounting to P5 billion. Total tenders hit P11.072 billion.

“Finally, it is a full award,” National Treasurer Rosalia V. De Leon told reporters after the auction.

De Leon noted that the government saw yields declined in 91-day papers with oversubscription as market takes position in the front end with faster inflation, expected surge on US Federate Reserve rate and possible rate action from central bank in the second half.

However, she said the “continued rate upward movements in the 182- and 364-day [were recorded] given higher inflation forecast this year and as BSP [Bangko Sentral ng Pilipinas] starts hiking policy rates.”

Last week, the Treasury bureau announced that the government will borrow P200 billion from the domestic market in April, less than the P250 billion set for March.

The bureau plans to sell P60 billion worth of short-dated IOUs or T-bills and P140 billion of longer-tenor notes, or Treasury bonds.

Breaking down, P20 billion in T-bills will be sourced through the 91-day tenor, P20 billion through the 182-day tenor and P20 billion more through the 364-day tenor.

Meanwhile, P35 billion in T-bonds will be generated through the three-year tenor, P35 billion through the four-year tenor, P35 billion through the seven-year tenor and another P35 billion through the 10-year tenor.