Gov’t fully awards T-bill offer as yields decline
THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday as rates continued to drop on slowing inflation.
The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P77.68 billion, more than five times the initial offer and higher than the P73.58 billion seen last week.
Broken down, the Treasury raised P5 billion as planned via the 91-day securities from P27.49 billion in bids. The average rate of the three-month debt paper fell by 10.6 basis points (bps) to 0.875% from 0.969% fetched last week.
The government also borrowed P5 billion as programmed via the 182-day securities it offered on Monday from P26.38 billion in tenders. The six-month T-bill’s average rate fell by 2.4 bps to 1.097% from 1.121% previously.
Lastly, the Treasury bureau made a full P5-billion award of the 364-day papers as tenders reached P23.8 billion. The average yield on the one-year instrument stood at 1.415%, down by 5.3 bps from 1.468% a week earlier.
At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 0.9348%, 1.1246% and 1.4809%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.
National Treasurer Rosalia V. de Leon in a Viber message to reporters said T-bill rates declined on slowing inflation and a heavy bias towards short tenors as the US Federal Reserve gets ready to unwind its pandemic-driven stimulus.
Headline inflation in December 2021 eased to 3.6%, its lowest in a year, from the 4.2% recorded in November as the rise in food and transport costs slowed.
The December print brought the 2021 average to a three-year high of 4.5%, breaching the 2-4% target of the central bank as well as its revised 4.4% forecast.
US Federal Reserve Governor Lael Brainard last week said rate hikes could start as soon as the US central bank ends its bond purchases, which is set for March.
“[Unwinding] of easy monetary policies has been anticipated, more so now in US with high inflation,” Ms. De Leon said, noting the Bangko Sentral ng Pilipinas has indicated that economic recovery will continue to be supported.
Meanwhile, a bond trader in a Viber message said the decline in T-bill yields was expected amid strong demand for debt papers at the short end as market players park their excess liquidity in safe assets like government debt.
“With Omicron still floating around, the market’s preference is to park these excess funds in short-end government securities until there’s any appetite to deploy it in riskier assets.”
The Treasury plans to borrow P200 billion from the domestic market this month, or P60 billion via T-bills and P140 billion from T-bonds.
The government borrows from local and external sources to help fund a budget deficit capped at 7.7% of gross domestic product this year. — Jenina P. Ibañez
