The government increased its borrowing from local creditors to take advantage of strong bids, despite the generally higher yields.
The Bureau of the Treasury offered P20 billion in three-, six-, and 12-month IOUs. After reviewing the bids, the auction committee accepted additional offers for the 182-day paper, raising the issue size to P22.6 billion.
Total tenders reached P53.11 billion, slightly below the P53.38 billion recorded at the Aug. 27 T-bill auction.
Yield on three-month T-bills decreased by 1.9 basis points to 5.947 percent from 5.966 percent last week. The government borrowed P6.5 billion as planned from the 91-day notes, even though investors were willing to lend up to P18.01 billion.
Interest rate on six-month T-bills increased by 0.6 basis point to 6.002 percent, compared to 5.996 percent the previous week.
Despite higher rates, the Treasury increased the issue size for 182-day securities to P9.1 billion from the original P6.5 billion, driven by strong demand with bids totaling P19.26 billion.
Lastly, the average rate for one-year debt increased by 1.8 basis points to 6.040 percent from 6.022 percent last week, enabling the Treasury to award the full P7-billion.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that yields were generally slightly higher on Monday, Sept. 2, following the government's $2.5 billion triple-tranche global bond sale.
Ricafort explained that the dollar-denominated issuance absorbed some of the excess liquidity in the financial system.
“Also as some investors in recent weeks locked in investable funds in longer-dated tenors amid the easing trend in local and global bond yields, after the -0.25 local policy rate cut on Aug. 15, 2024 and the widely expected Fed [US Federal Reserve] rate cut on Sept. 18, 2024 that is expected start of three series of Fed rate cuts from 2024-2026 that could be matched locally,” Ricafort said in a Viber message.
Last week, the US Fed indicated it may cut interest rates as early as September to alleviate the financial burden on households and businesses facing high borrowing costs.
Meanwhile, on Aug. 15, the BSP lowered interest rates by 25 basis points, bringing the reverse repurchase rate down to 6.25 percent. (Derco Rosal)