THE GOVERNMENT made a full award of the Treasury bills (T-bills) it auctioned off on Monday even as rates continued to climb across the board, with investors still worried about faster inflation.

The Bureau of the Treasury (BTr) raised P20 billion via the T-bills on Monday as total bids reached P64 billion, making the offering over three times oversubscribed. The demand seen yesterday was also higher than the P42.43 billion recorded at last week’s auction.

The Treasury also opened its tap facility to raise another P5 billion from the one-year securities as the increase in the tenor’s rate was marginal.

Broken down, the BTr borrowed P5 billion as planned via the 91-day papers, with total tenders reaching P12.572 billion. The three-month papers fetched an average rate of 1.336%, higher by 10.4 basis points (bps) than the 1.232% seen last week.

The Treasury also raised P5 billion as programmed from the 182-day instruments as the tenor attracted P22.638 billion in bids. The six-month papers’ average yield climbed by 19.1 bps to 1.718% from 1.527% previously.

Lastly, the government made a full P10-billion award of the 364-day T-bills it offered on Monday from total tenders of P28.798 billion. The one-year securities were quoted at an average rate of 1.997%, inching up by 0.7 bp from the previous week’s rate of 1.99%.

“Rates continue to creep up with lingering concerns on higher inflation,” National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction.

A bond trader shared the same view, but noted that T-bill rates are still lower than the country’s inflation print.

“The market sees the need for the government to borrow more since less economic activity means lower revenue collections. And right now, the government will likely be able to borrow short term as there’s not much demand for long-end tenors,” the trader said via Viber.

Headline inflation stood at 4.7% in February, picking up from 4.2% in January and 2.6% in February 2020, the government reported earlier this month. It was also the fastest pace since the 5.1% print in December 2018.

Year to date, February inflation settled at 4.5%, already beyond the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target for the year.

BSP Governor Benjamin E. Diokno said earlier this month that the central bank is not inclined to tighten monetary policy yet as they see the uptick in inflation as “temporary,” with pressures coming from the supply side.

The Monetary Board will meet to review its policy settings on Thursday.

On Tuesday, the Treasury is looking to raise P30 billion from reissued 10-year Treasury bonds (T-bonds) which have a remaining life of nine years and three months.

It 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 T-bonds. — Beatrice M. Laforga

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