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YIELDS of Treasury bills (T-bills) offered on Monday went down across all tenors on strong demand ahead of the Bangko Sentral ng Pilipinas’ (BSP) meeting this week, where it could hike benchmark rates to quell rising inflation risks.

The Bureau of the Treasury (BTr) raised P40.65 billion via the T-bills it auctioned off, above the P33-billion program as total tenders reached P127.256 billion or more than thrice the amount on offer. This was also higher than the P99.425 billion in demand recorded on April 13.

Strong demand for the 91-day and 182-day papers prompted the Auction Committee to double its acceptance of noncompetitive bids for both tenors to P9.6 billion, upsizing the awarded amounts, it said in a statement. Meanwhile, it partially awarded the one-year T-bill to cap its average rate.

Broken down, the Treasury raised P16.8 billion via the 91-day T-bills, above the P12 billion it placed on the auction block as demand for the tenor reached P60.371 billion. The three-month paper fetched an average rate of 4.542%, falling by 20.8 basis points (bps) from 4.75% last week. Bids accepted had yields ranging from 4.5% to 4.596%.

The government likewise borrowed P16.8 billion via the 182-day debt, higher than the P12-billion offering as tenders reached P44.21 billion. The average rate of the six-month T-bill was at 4.649%, dropping by 41.3 bps from 4.882% previously. Tenders awarded carried rates from 4.598% to 4.7%.

Meanwhile, the BTr sold only P7.05 billion in 364-day securities, below the P9 billion on offer even as bids totaled P22.675 billion. The one-year paper fetched an average yield of 5.052%, easing by 11.6 bps from 5.168% last week. Accepted bids had rates from 4.95% to 5.097%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.618%, 4.708%, and 5.097%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“The upsized offering in this week’s T-bill auction reflected heightened demand from investors prior to the BSP policy meeting later this week,” the first trader said in an e-mail.

Yields at the secondary market were mostly lower on Monday, which could show that players have already priced in a potential rate hike by the central bank, the second trader said in an e-mail.

T-bill yields continued to move lower amid easing inflation concerns amid the recent decline in global oil prices and prospects of BSP policy tightening, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

A BusinessWorld poll showed that 11 out of 19 analysts expect the Monetary Board to hike its target reverse repurchase rate by 25 bps to 4.5% at its meeting on Thursday (April 23), which would mark the first increase since October 2023.

BSP Governor Eli M. Remolona, Jr. told BusinessWorld last week that the central bank has room to tighten to temper inflation risks amid the Middle East conflict as second-round effects may emerge sooner than expected, with the global oil price shock expected to spill over into domestic food and transport costs.

In March, elevated oil prices due to the war drove inflation to a near two-year high of 4.1%, faster than the BSP’s 3.1%-3.9% forecast and 2%-4% target for the year.

On Tuesday, the government is targeting to raise P20 billion to P30 billion from reissued 10-year Treasury bonds (T-bonds) with a remaining life of seven years and three months.

The BTr wants to borrow up to P248 billion from the domestic market this month or P140 billion via T-bills and P108 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.61 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy

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