MANILA -- The impact of cuts in banks’ reserve requirement ratio (RRR) along with expectations for additional cuts in the Bangko Sentral ng Pilipinas’ (BSP) key rates resulted in a strong demand for Treasury bills (T-bills) on Monday.
The Bureau of the Treasury (BTr) offered PHP15 billion worth of debt paper, all of which are one-day longer than the usual tenor, but banks submitted a total of PHP49.6 billion bids.
It offered the 92-day paper for PHP4 billion but tenders amounted to PHP9.22 billion. The auction committee made a full award.
Its average rate declined to 4.992 percent from 5.150 percent during the auction last May 27. Its average rate in the secondary market at the end of Monday’s morning session is 5.298 percent.
BTr offered the 183-day paper for PHP5 billion and bids were more than thrice at PHP15.545 billion. The auction committee fully awarded this paper.
Its rates slipped to 5.40 percent from 5.590 percent in the previous auction. Secondary rate after the morning session is at 5.569 percent.
Tenders for the 365-paper were more than four times the PHP6 billion offer after it amounted to PHP24.825 billion. The auction committee made a full award.
Rate averaged at 5.498 percent from 5.683 percent in the previous session. Secondary market rate in the morning session is 5.670 percent.
Deputy Treasurer Erwin Sta. Ana dubbed as “successful” the result of T-bills auction because “the rates came in at a much lower rate than what the market predicted through our initial, pre-auction survey.”
He told journalists after the auction that because of the additional liquidity created by the cut in banks’ RRR, banks have more funds and the main investment option are government securities.
Bangko Sentral ng Pilipinas’ (BSP) policy-making Monetary Board (MB) slashed by 200 basis points the RRR of universal and commercial banks (U/KBs’) to 16 percent. These will be implemented in phased level at 100 basis points by May 31, 2019, and 50 basis points each on June 28 and July 26.
The same rate of reduction was also made for thrift banks’ (TBs) and non-bank financial institutions with quasi-banking functions (NBQBs) while a 100 basis points cut for demand deposits and Negotiable Orders of Withdrawal (NOW) of rural banks (RBs) and cooperative banks (Coop banks) took effect last May 31.
Authorities have said that a 100 basis points cut in U/KBs’ RRR is expected to release about PHP90 billion to the system while it is projected to be about PHP9.3 billion for TBs, and PHP1.8 billion for RBs and coop banks.
Sta. Ana also said that indications from monetary officials of possible cuts in the Bangko Sentral ng Pilipinas’ (BSP) key rates in the coming months also boosted investors’ sentiments.
He expects this turn-out during government securities auctions to continue in the near term “unless there is something drastic happening between now and ‘til the end of the RRR cut.”
“So we think that rates would probably behave this way, although maybe not as drastic but it would observe a downward trajectory,” he said.
Meanwhile, Sta. Ana said they are considering to issuing the planned yen-denominated Samurai bond around the third week of June.
He stressed that the amount of Samurai bonds to be issued will depend on the government’s funding needs, noting the delay in the approval of this year’s national budget and the recent Euro bond and renminbi-denominated Panda bond issuance.
“We may calibrate the amount. Last year we (issued) approximately USD1.5 billion. Now we may trim it depending on spending -- if it picks up -- (and) if BIR (Bureau of Internal Revenue) and BOC (Bureau of Customs) meet their targets,” he said.
“We balance everything out through borrowing so we may adjust the size as my principals have announced earlier,” he added. (PNA)
