THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday even as yields went up after the central bank raised its inflation forecasts.

The Bureau of the Treasury (BTr) raised P15 billion as planned via the T-bills it auctioned off on Monday as total tenders reached P35.92 billion, more than double the initial offer. However, bids were lower than the P41.23 billion seen last week.

Broken down, the Treasury bureau raised P5 billion as planned via the 91-day securities from P13.314 billion in bids. The three-month debt paper fetched an average rate of 0.899%, up by 8.9 basis points (bps) from the 0.81% seen last week.

The BTr also borrowed the programmed P5 billion from the 182-day T-bills it offered on Monday from P11.49 billion in tenders. The average rate of the six-month debt went up by 9.1 bps to 1.157% from 1.066% previously.

Lastly, the government made a full P5-billion award of the 364-day debt papers it offered on Monday as bids reached P11.118 billion. The average yield on the one-year instrument stood at 1.568%, up by 9.3 bps from 1.475% a week earlier.

At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 0.8118%, 1.0631%, and 1.5003%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

“Rates rose following upward adjustment for inflation this year,” National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction.

Rates also went up due to increasing tensions in Ukraine, she added.

The Bangko Sentral ng Pilipinas (BSP) raised its inflation forecast for 2022 to 3.7% from 3.4% previously and its 2023 estimate to 3.3% from 3.2%.

Inflation risks include pork and fish supply shortages, along with the effect of higher oil prices on transport fares, the central bank said.

Meanwhile, US officials have warned that Russian troops could invade Ukraine “in the coming days,” Reuters reported. Russia’s nuclear forces held drills supervised by Russian President Vladimir Putin on Saturday.

US President Joseph R. Biden agreed “in principle” to summit talks with Mr. Putin, hinting at a possible diplomatic solution.

On the other hand, a trader in a Viber message said yields inched up on investors anticipating a rate hike from the US Federal Reserve in March.

“Dealers and investors are also attuned to the book-building of the current RTB (retail Treasury bond) offering, so some investible funds may be heading there.”

The government last week raised an initial P120.764 billion at its rate-setting auction for its offer of five-year RTBs as tenders reached P183.44 billion, or more than six times the P30-billion plan. The retail bonds fetched a coupon rate of 4.875%.

The offer period for the peso-denominated debt will run from Feb. 15 to 28. There will also be a swap offer for bonds falling due on March 14 and July 4.

Before it canceled the remaining two bond auctions for February, the BTr had planned to raise P200 billion from the domestic market this month, or P60 billion via T-bills and P140 billion from Treasury 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 with Reuters

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