T-bill rates mostly higher before inflation report

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday even as rates mostly climbed due to bets that Philippine headline inflation quickened further in November.

The Bureau of the Treasury (BTr) raised P15 billion as planned from the T-bills it auctioned off on Monday as total bids reached P57.8 billion, almost four times as much as the amount on offer and higher than the P51.665 billion in tenders seen the previous week.

Broken down, the Treasury borrowed the programmed P5 billion through the 91-day T-bills as tenders for the tenor reached P21.75 billion. The three-month paper was quoted at an average rate of 5.63%, down by 1.7 basis points (bps) from 5.647% seen last week, with accepted bids having yields ranging from 5.62% to 5.64%.

The government likewise made a full P5-billion award of the 182-day securities, with bids reaching P16.11 billion. The average rate of the six-month T-bill stood at 5.905%, up by 2.3 bps from the 5.882% fetched last week, with accepted rates at 5.85% to 5.925%

Lastly, the Treasury raised P5 billion as planned via the 364-day debt papers as demand for the tenor totaled P19.94 billion. The average rate of the one-year debt increased by 3.2 bps to 5.937% from 5.905% quoted last week, with the tenders accepted carrying yields ranging from 5.92% to 5.948%.

At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.6445%, 5.9236%, and 6.0048%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.

The government fully awarded the T-bills placed on the auction block on Monday as the offer was 3.9 times oversubscribed and the average rates fetched for the tenors were “all lower than the prevailing secondary market rates,” the Treasury bureau said in a statement.

“The awarded T-bill rates today tracked the latest short-term secondary BVAL rates, despite moving in mixed directions from last week’s auction,” a trader said in an e-mail.

T-bill yields mostly rose week on week amid market expectations that inflation picked up last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation may have picked up in November as prices of key food items rose due to the impact of several typhoons, analysts said.

A BusinessWorld poll of 15 analysts conducted last week yielded a median estimate of 2.5% for the November consumer price index (CPI), within the central bank’s 2.2% to 3% forecast for the month.

If realized, the November print would be slightly faster than the 2.3% clip in October but slower than 4.1% in the same month a year ago.

This would also mark the 12th straight month that headline inflation was within the Bangko Sentral ng Pilipinas’ (BSP) 2-4% annual target.

The BSP expects inflation to average 3.1% this year. In the first 10 months, headline inflation averaged 3.3%.

The Philippine Statistics Authority will release November CPI data on Dec. 5. (Thursday).

“The higher yields for the relatively longer 182- and 364-day bills reflected investors’ appetite for these issuances as they opted to secure yields with a longer holding period. This was due to potential market noise from the lingering uncertainty ahead of the incoming Trump administration,” the trader added.

US President-elect Donald J. Trump will take office on Jan. 20, 2025.

Uncertainties around US policies may slow global economic growth modestly in 2025, according to major brokerages, Reuters reported. They expect Mr. Trump’s proposed tariffs to fuel volatility across global mar-kets, spurring inflationary pressures and, in turn, limiting the scope for major central banks to ease monetary policy.

World economies and equity markets have had a robust year, with global growth expected to average 3.1% this year, a Reuters poll published in October showed.

The BTr plans to raise P75 billion from the domestic debt market this month, or P60 billion via T-bills and P15 billion through Treasury bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product this year. — AMCS with Reuters