BTr partially awards T-bill offer

THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it offered on Monday as yields were mixed amid expectations that headline inflation may have picked up anew in June following the surge in oil prices seen last month amid the Israel-Iran war.

The Bureau of the Treasury (BTr) raised just P23.95 billion from the T-bills it auctioned off on Monday, short of the P25-billion plan, even as the offer was more than twice oversubscribed, with total bids reaching P56.84 billion. However, the total demand seen was lower than the P65.47 billion in tenders recorded on June 24.

The government partially awarded the three-month paper as it rejected high bids, the Treasury said in a statement, with players asking for yields higher than secondary market levels. The BTr sold only P6.95 billion in 91-day T-bills on Monday, well below the P8-billion plan, even as total tenders for the tenor reached P18.125 billion. The three-month paper was quoted at an average rate of 5.526%, 0.4 basis point (bp) lower than the 5.53% seen in the previous auction, with bids accepted having yields of 5.49% to 5.548%.

Meanwhile, the government raised P8 billion as planned from the 180-day securities it offered on Monday as bids amounted to P20.9 billion. The average rate of the six-month T-bill was at 5.607%, rising by 5 bps from the 5.557% fetched last week, with accepted yields ranging from 5.583% to 5.64%.

Lastly, the Treasury raised P9 billion as planned via the 364-day debt papers as demand for the tenor totaled P18.715 billion. The average rate of the one-year T-bill inched down by 0.4 bp to 5.651% from 5.655% previously. Accepted bids carried yields of 5.629% to 5.669%.

“Average rates for the 180- and 364-day T-bills fell below prevailing secondary market rates,” the BTr said.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.479%, 5.642%, and 5.696%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government made a partial award of its T-bill offer as demand was “modest to decent,” a trader said in a text message.

The trader added that the market is likely on wait-and-see mode to gauge the BTr’s awarding behavior at its upcoming bond auctions before making any “significant” moves.

T-bill yield movements were mostly marginal on Monday as oil prices and the peso-dollar exchange rate have normalized as Iran and Israel last week agreed to a ceasefire, easing the renewed inflation concerns sparked by the market volatility caused by the 12-day conflict, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Still, the conflict is expected to have caused a pickup in headline inflation last month, he said.

Mr. Ricafort also noted that T-bill movements remained “modest” despite the 25-bp rate cut delivered by the Bangko Sentral ng Pilipinas (BSP) on June 19 and expectations of further monetary easing at home and in the United States.

Philippine inflation may have quickened slightly in June, with the spike in fuel costs likely to have been offset by broadly stable food prices, analysts said.

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.5% for the June consumer price index, accelerating from the 1.3% in May but still below the BSP’s 2-4% annual target.

If realized, this would be the fastest clip in three months or since 1.8% in March. It would also mark the first pickup since December as the CPI has been on a downtrend since February. Still, this would be slower than the 3.7% print in June 2024.

The median estimate is also well within the BSP’s June forecast of 1.1% to 1.9%.

“Upward price pressures for the month are likely to be driven by higher meat and vegetable prices, elevated oil prices, and the depreciation of the peso. These pressures, however, could be partially offset by lower prices of rice, fish, and fruits, as well as lower electricity rates,” the BSP said on Monday.

“Going forward, the BSP remains committed to safeguarding price stability by ensuring that monetary policy settings are conducive to sustainable economic growth and employment.”

On Tuesday, the government will offer P30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of five years and 25 days.

The BTr wants to raise P250 billion from the domestic market in July, or P125 billion through T-bills and P125 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — A.M.C. Sy