T-bill bids rejected as investors seek higher yields

THE BUREAU of the Treasury (BTr) rejected all Treasury bill (T-bill) bids on Monday even as the offer was oversubscribed as investors asked for higher rates.

Bids for the T-bills the government offered on Monday were at P18.54 billion versus the BTr’s plan to raise P15 billion via the short-term papers.

Broken down, bids for the 91-day securities reached P6.07 billion, higher than the P5-billion plan. Had the Treasury made a full award, the three-month debt papers would have fetched an average rate of 1.49%, up by 59.1 basis points (bps) from the 0.899% seen last week.

The BTr also rejected the P5.65 billion in tenders for the 182-day securities, which was higher than the programmed P5 billion. The average rate of the six-month T-bill would have gone up by 57.9 bps to 1.736% from 1.157% previously had the government made a full award.

Lastly, the government turned down P6.82 billion in bids for the 364-day debt papers from an initial offer of P5 billion. If the tenor was fully awarded, the average yield on the one-year instrument would have stood at 1.865%, up by 29.7 bps from the 1.568% fetched a week earlier.

At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 0.9723%, 1.1639% and 1.5453%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

A trader in a Viber message said investors are asking for higher yields on indications of higher inflation after nine straight weeks of oil price increases.

Brent crude on Thursday exceeded $100 a barrel for the first time since 2014 after Russia invaded Ukraine, Reuters reported.

On Monday, Brent crude went up by 4% to $101.88 per barrel, while US West Texas Intermediate crude rose by 5% to $96.14 a barrel.

Inflation likely jumped to 3.3% in February on rising oil and commodity prices, a BusinessWorld poll of 15 analysts showed.

If realized, this median estimate would be faster than the 3% in January. Still, this is within the 2-4% target set by the Bangko Sentral ng Pilipinas.

“BTr though has room to reject in the short term following the reception of the RTB (retail Treasury bonds),” the trader said. “However, we expect this trend to continue (investors looking for higher yield) on risk aversion.”

The government raised an initial P120.764 billion at its rate-setting auction on Feb. 15 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 RTBs was set to end on Monday (Feb. 28).

On Tuesday, the BTr will auction off P35 billion in fresh three-year Treasury bonds (T-bonds).

The BTr plans to raise P250 billion from the domestic market this month, or P75 billion via T-bills and P175 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. — J.P. Ibañez