THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as yields fell across all tenors amid robust demand for short-dated securities and improved sentiment after global crude oil prices eased over the weekend on renewed hopes of a de-escalation in the Middle East conflict.

The Bureau of the Treasury (BTr) raised P50 billion as planned from the T-bills auction after total tenders reached P134.519 billion, nearly three times the amount on offer and slightly below the P138.41 billion in demand recorded last week.

The BTr said it awarded the entire issue because all tenors fetched average rates lower than those seen at the previous auction, supported by strong investor demand.

For the 91-day T-bills, the Treasury borrowed P20 billion as bids reached P56.861 billion. The three-month paper fetched an average rate of 5.059%, down by 4.5 basis points (bps) from 5.104% last week. Accepted bids carried yields ranging from 5.023% to 5.094%.

For the 182-day securities, the government raised P20 billion after tenders hit P48.8 billion. The average yield on the six-month T-bill was 5.671%, down 1.4 bps from 5.685% previously. Awards ranged from 5.575% to 5.671%.

The BTr also sold P10 billion in 364-day securities as demand for the tenor totaled P28.858 billion. The one-year paper fetched an average rate of 5.95%, lower by 1.6 bps from 5.966% last week. Accepted bid yields were from 5.9% to 5.973%.

In the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.0628%, 5.4814%, and 5.9696%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data from the Treasury.

“Demand remained the same week on week, and the drop in yields was likely tracking the movement in oil prices over the weekend,” a trader said in a text message.

Oil prices tumbled more than 5% on Monday after the US and Iran paused strikes over the weekend following two weeks of attacks, raising hopes of a diplomatic solution that could de-escalate the conflict and allow shipping to resume in the Strait of Hormuz, Reuters reported.

Brent crude futures fell $5.70, or around 5.9%, to $91.08 a barrel by 0804 GMT after briefly slipping below the key $90 support level earlier in the session. US West Texas Intermediate crude was at $84.51 a barrel, down $4.80, or around 5.4%.

Both contracts were trading at their lowest levels in nearly a week after rising for the previous three weeks.

Brent had earlier reached $100 a barrel as the conflict, which cut oil shipments through the Strait of Hormuz, spilled over into the Red Sea and hindered exports from Saudi Arabia, the world’s top exporter, through the Bab el-Mandeb strait to Asia.

US ambassador to the United Nations Mike Waltz told Fox News Sunday and other US media that President Donald J. Trump had decided to pause US attacks to allow more time for diplomacy.

Kpler shipping data showed that fewer than 10 commodity vessels passed through the Strait of Hormuz daily over the weekend.

Ship traffic through the Bab el-Mandeb strait also declined on Sunday after Yemeni Houthis attacked Saudi oil installations along the Red Sea coast, although a third Chinese supertanker exited via the strait.

Some analysts expect markets to remain supported if crude supplies continue to be disrupted by shipping risks in the Middle East and Russia’s war in Ukraine.

On Tuesday, the government is seeking to raise up to P50 billion from a dual-tenor Treasury bond (T-bond) offering. It will offer P30 billion in reissued seven-year T-bonds with a remaining life of three years and two months, and P10 billion to P20 billion in 20-year notes with a remaining life of 17 years and 10 months.

The BTr aims to raise P410 billion from the domestic market this month, or P250 billion through T-bills and P160 billion through T-bonds. The government’s regular borrowing program helps cover its financing needs while keeping domestic auctions active for investors managing short-term cash and longer-dated holdings.

The government borrows from local and foreign sources to help finance its budget deficit, which is capped at P1.659 trillion, or 5.4% of gross domestic product, this year. — A.M.C. Sy with Reuters