Investors prefer long tenors

The various government securities eligible dealers or GSED would rather skip the 91-day Treasury bills and focused Monday on the longer-dated T-bills put at auction by the Bureau of the Treasury.

He said the market was likely to behave in the manner they have displayed at present and over the near-term or until next year given the stabilized inflation

Unlike the 91-day benchmark, interest on both the 182- and 364-day T-bills was strong. The auction committee awarded in full the bids for the benchmarks.

While the BTr awarded only a portion of the bids for the 91-day tenor, full awards were granted on bids for both 182- and 364-day T-bills.

The three-month T-bill rate on Monday averaged 5.396 percent, a 2.2 basis point uptick from only 5.418 percent at the previous auction, with even more diminished tenders of only P3.16 billion from P5.95 billion when it was last put at auction.

But the 182- and 364-day benchmarks showed further improvements to 5.914 percent and 5.969 percent, respectively, from when they averaged 6.154 percent and 6.253 percent a week ago.

Demand for the 364-day tenor remained robust as bids for the tenor totaled P36.20 billion, surpassing the offering volume of only P8 billion by over four times.

The various tenors collectively attracted P51.40 billion in tenders but the awards stood well below the indicated volume of P20 billion at only P16.3 billion.

Deputy Treasurer Erwin Sta. Ana expressed satisfaction with the auction results, saying the aggressive demand for the 364-day tenor particularly triggered the opening of the tap facility.

“Well, good turnout (with) above P51 billion in total tenders. We were able to raise about P16 billion and we have opened the tap for the 364-day (as) there’s really excess demand on the 364-day,” Sta. Ana told reporters.

Commenting on the tap, the Treasury executive said they capped the award at P8 billion, the same size as the original offer.

He said the market was likely to behave in the manner they have displayed at present and over the near-term or until next year given the stabilized inflation.

On the over-the-counter (OTC) window for both government-owned and controlled corporations (GOCC) and tax-exempt institutions (TEI), Sta. Ana plans to exercise some “leniency” as they don’t have knowledge on demand from GOCC and TEI.

“There have been several orders already in the previous (OTC) last week [as] we have more than six billion in OTC placements, depending on the seasonality of cash from GOCC,” he said.

“As you know, we aim to raise quite a number or at least a sizeable amount of domestic borrowings given our target mix so we see that there’s liquidity now in the secondary market trading volumes,” Sta. Ana said.