By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT made a partial award of the Treasury bills (T-bill) it auctioned off on Monday, with rates on the longer tenors rising amid persistent concerns over domestic inflation.
The Bureau of the Treasury (BTr) borrowed just P12.101 billion at its T-bills auction yesterday, falling short of the P15 billion it offered to investors.
Total tenders amounted to P28.2 billion, declining from the P30 billion recorded at last week’s offering.
Broken down, the government borrowed P4 billion as planned via the 91-day tenor yesterday as tenders by investors totalled P13.528 billion. The average rate dropped 1.7 basis points to 3.291% from the 3.308% logged in the previous auction.
Meanwhile, the Treasury made a partial award of the 182-day papers as it raised just P3.424 billion, falling short of the P5 billion the bureau intended to borrow. This, as the average yield climbed 14 basis points to 4.185% from last week’s 4.045%.
For the 364-day T-bills, the BTr likewise borrowed just P4.677 billion out of the P6 billion it wanted to raise. The average rate also picked up by 9.7 basis points to 4.767% from the 4.67% tallied in the previous offering.
At the secondary market prior to the auction, three-month and six-month papers were quoted at 3.6367% and 4.24%, respectively, while one-year securities fetched a 4.6893% yield.
At the close of the trading, all tenors rallied to finish the day with lower yields. The 91-day T-bill fetched 3.2675%, while the 182-day papers were quoted at 4.0282%. The 364-day papers also saw their yield drop slightly to 4.6548%.
National Treasurer Rosalia V. De Leon said the Treasury saw “a lot of demand” as investors still prefer to lock in their funds in the short-end of the curve.
“We still see that there’s a lot of demand, particularly they just want to stay on the short-end,” Ms. De Leon told reporters following the auction yesterday.
She added that the market was still concerned about domestic inflation, with the Bangko Sentral ng Pilipinas (BSP) expected to raise its benchmark rates anew after the sustained rise in prices.
“[Investors priced in] the persistent concerns on inflation and expectations of the BSP will again hike [again and] make the move this August.”
Earlier this month, data released by the Philippine Statistics Authority showed headline inflation accelerated to a fresh five-year high of 5.2% in June.
The inflation print last month picked up from the 4.6% figure logged in May and exceeded estimates from the BSP and the Department of Finance.
BSP Governor Nestor A. Espenilla, Jr. said the central bank will review its forecast inflation path as this will shape the strength and timing of its next monetary policy response to temper inflation expectations.
The BSP has already raised its rates twice this year, with borrowing costs now within a 3-4% range.
“All these are the persistent concerns of the market so they’re already putting some buffer in terms of the rates to make sure that they will be covered because of the rate hikes even for the short-end of the curve,” Ms. De Leon said.
She added banks and other financial institutions also priced in the inflation print in the US, which boosted expectations that the Federal Reserve will raise interest rates as well.
Meanwhile, a trader said the auction results were in line with expectations as the shortest tenor “traded sideways to lower.”
“For the pricing, we still saw demand for the 91-day [papers] given the total tenders amounting to P13 billion versus the P4 billion offer,” the trader said.
The Treasury is set to raise P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

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