Gov't sells P7.5-B T-bills

MANILA, Philippines - The government yesterday sold P7.5 billion worth of 91, 182 and 364-day Treasury bills (T-bills) on the back of strong demand from investors who opted to park their funds in safer facilities such as government debt papers.

National Treasurer Roberto Tan attributed strong investor demand for government papers to “strong economic fundamentals” such as the budget surplus posted in August and the better-than-expected budget gap in the eight months to August.

 “The economic fundamentals are very strong,” Tan said.

In August, the government recorded a budget surplus of P2.523 billion and a budget deficit of P71.208 billion in January to August. The eight-month deficit was well below the third quarter program deficit of P183.343 billion.

Tan said the reduction in auction dates in the fourth quarter of the year also drove investor interest during yesterday’s auction.

 “The reduction in auction exercises in the fourth quarter also affected the bids yesterday,” Tan said.

The government has programmed to borrow P90 billion from the domestic market in the fourth quarter of the year or P45 billion worth of 91-, 182, and 364-day Treasury bills and another P45 billion worth of five-, seven and 10-year Treasury bonds (T-bonds).

The P90 billion is lower than the third quarter borrowing program of P108 billion, the second quarter debt plan of P106 billion and first quarter’s P117 billion.

During yesterday’s debt sale, the yield on the 91-day T-bill tumbled to 0.712 percent from 0.745 percent previously as total tenders reached P3.97 billion. The government sold P1 billion worth of the paper.

The 182-day T-bill fetched an average rate of 1.050 percent, lower than the rate of a previous float of 1.445 percent but demand for the paper was strong at P10.825 billion. This was more than four times the P2.5-billion programmed debt sale for the six-month paper.

The yield on 364-day T-bill declined to 1.350 percent from 1.906 percent previously. Total tenders reached P9.8 billion, more than double the P4 billion that the government offered.

The government borrows from the local debt market through the issuance of Treasury bills and bonds.

Meanwhile, government is planning to issue at least P30 billion worth of retail treasury bonds (RTBs) in a rate-setting auction on Oct. 9, Deputy Treasurer Eduardo Mendiola said yesterday.

The planned 25-year RTBs will be offered to the public until Oct. 22 after the rate-setting auction on Oct. 9, Mendiola also said.

The government has tapped the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP) as joint issue managers for the transaction.

Co-issue managers are First Metro Investment Corp., Rizal Commercial Banking Corp., the Philippine National Bank, Deutsche Bank, BDO Capital and Metropolitan Bank & Trust Co.

While the minimum issue size is P30 billion, the government expects to sell more as demand for RTBs has been steadily growing in recent years.

Mendiola said that as seen in the February RTB debt sale of 15-year and 20-year bonds, investors are already starting to feel comfortable parking their funds in long-term debt knowing they can sell this anytime in the secondary market. The government sold P179.9-billion worth of RTBs in February.