THE GOVERNMENT upsized the volume of Treasury bills (T-bills) it awarded on Monday and also opened its tap facility as rates dropped ahead of the release of April inflation data.

The Bureau of the Treasury (BTr) raised P28.2 billion via the T-bills on Monday, more than the programmed P25 billion. Total tenders reached P93.9 billion or nearly four times as much as the initial offer, and higher than the P71.596 billion in demand seen during last week’s auction.

The BTr also opened its tap facility to raise P7 billion more via the one-year securities.

Broken down, the Treasury made a full P5-billion award of the 91-day debt papers it offered from P18.1 billion in bids. The three-month papers fetched an average rate of 1.306%, down by 6.3 basis points (bps) from 1.369% seen last week.

Meanwhile, it raised P11.2 billion from the 182-day T-bills, higher than the programmed P8 billion, after the tenor attracted bids worth P38.075 billion. The average yield of the six-month debt also dropped by 8.5 bps to 1.629% from 1.714% previously.

Lastly, the BTr borrowed P12 billion as planned via the 364-day instruments as total tenders hit P37.865 billion. The one-year IOUs were quoted at 1.863%, down 1.7 bps from the 1.88% in last week’s auction.

“We welcomed strong participation in today’s auction with rates declining across tenors in spite of projected elevated inflation last month,” National Treasurer Rosalia V. de Leon told reporters via Viber after the auction on Monday.

A bond trader, meanwhile, said the auction results showed the market shares the central bank’s view that inflation has already peaked or will peak soon, and is likely to slow in the second half of the year.

“At the same time, the system is too liquid given the slow economic activity due to the extended lockdown,” the trader added.

Headline inflation could have accelerated again in April to go beyond the annual target for the fourth consecutive month due to high food and transport prices, according to analysts.

A BusinessWorld poll last week of 17 analysts yielded a median estimate of 4.7% for April headline inflation, close to the upper end of the 4.2% to 5% estimate given by the Bangko Sentral ng Pilipinas (BSP) for the month. If realized, this will be faster than the 4.5% print logged in March.

Analysts attributed their expectations of faster inflation to the high cost of pork products following the expiration of the government’s price cap, coupled with elevated transport costs due to the continued increase in oil prices.

The Philippine Statistics Authority will report on Wednesday, May 5, the consumer price index data for April.

The BTr will offer on Tuesday P35 billion in reissued five-year Treasury bonds (T-bonds) with a remaining life of four years and 11 months. The bonds carry a coupon rate of 3.375%.

The Treasury plans to raise P170 billion from the local bond market this month: P100 billion via weekly offerings of T-bills and P70 billion in T-bonds to be auctioned off fortnightly.

The government is looking to borrow P3 trillion this year from domestic and external sources to help fund a budget deficit seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga