BoT treasury
THE GOVERNMENT fully awarded the Treasury bills it offered on Monday even as yields climbed across the board. — BW FILE PHOTO

THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday even as rates climbed across the board on lingering concerns over faster inflation.

The Bureau of the Treasury (BTr) raised P20 billion as planned via its auction of T-bills on Monday as total tenders reached P42.43 billion, more than double the amount on offer. The demand was slightly lower than the P44 billion seen during last week’s offering.

Broken down, the BTr borrowed the programmed P5 billion in 91-day debt as bids hit P13.458 billion. The three month papers fetched an average rate of 1.232%, up by 9.3 basis points (bps) from the 1.139% seen last week.

It also raised P5 billion as planned via the 182-day T-bills from P8.632 billion in tenders. The average yield of the six-month papers likewise spiked by 21.1 bps to 1.527% from 1.316% previously.

Lastly, the government made a full P10-billion award of the 364-day securities, with demand reaching P20.34 billion. The one-year papers were quoted at an average rate of 1.99%, up 13.8 bps from the 1.852% seen in the previous auction.

National Treasurer Rosalia V. de Leon attributed the higher T-bill rates to the market’s reaction to news of high inflation that is expected to peak in the second quarter.

A bond trader shared the same view, saying the “gloomy inflation outlook” is also a concern for other economies amid the ongoing global crisis.

“This brings to spotlight those economies that have negative real rates (interest rate less inflation),” the trader said.

The Philippine Statistics Authority (PSA) earlier reported that headline inflation hit 4.7% last month, picking up from 4.2% in January and the 2.6% print in February 2020.

The February rate brought the two-month average to 4.5%, already above the central bank’s 2-4% annual target.

The Bangko Sentral ng Pilipinas (BSP) has said inflation will likely only begin slowing down in the second half of the year. BSP Governor Benjamin E. Diokno has also signaled that the central bank will likely keep its monetary policy loose in the meantime to help the economy rebound faster.

“Domestic rates also trended up as US Treasuries adjusted upwards with good prospects of strong rebound with a stimulus package. Supply side constraints also push rates as we also see oil prices increasing,” Ms. De Leon said in her Viber message to reporters after the auction.

US President Joseph R. Biden, Jr. last week signed a new $1.9-trillion stimulus package that aims to fast-track the recovery of the world’s largest economy.

The yield on the benchmark 10-year US Treasuries inched down by 0.5 bp to 1.637% on Monday from 1.642% on Friday. Week on week, the tenor rose by 4.7 bps from 1.59% on March 8.

The BTr wants to raise P160 billion from the local bond market this month, broken down into P100 billion in T-bills to be offered weekly and P60 billion via fortnightly auctions of Treasury bonds.

The government is looking to borrow P3 trillion this year from local and foreign lenders to help fund its budget deficit that is seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga