THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday even as its rate climbed on subdued demand and expectations of quicker inflation.
The Bureau of the Treasury (BTr) borrowed P30 billion as planned via the reissued 10-year bonds it auctioned off on Tuesday as the offering was more than twice oversubscribed, with bids reaching P63.045 billion.
The notes, which have a remaining life of nine years and five months, fetched an average rate of 3.066%, 34.2 basis points (bps) higher than the 2.724% quoted for the debt papers when the issue was last offered on Aug. 11.
The 10-year paper’s average rate climbed mainly due to expectations of faster inflation in January, National Treasurer Rosalia V. de Leon said on Tuesday.
“Good to see strong participation in the long end at relatively low pickup in yields,” Ms. De Leon told reporters via Viber after the auction.
“[We expect] some upward adjustments in the long end, but the front end will remain with abundant liquidity and heavy bias on this segment,” she added.
Headline likely quickened for the fourth straight month in January amid rising prices of food and oil products, a BusinessWorld poll of economists showed.
A poll of 16 economists last week yielded a median estimate of 3.6%, within the Bangko Sentral ng Pilipinas’ (BSP) 3.3-4.1% estimate for the month but near the upper end of the 2-4% annual target.
If realized, January inflation will be the fastest since 3.8% in February 2019 and will mark the fourth consecutive monthly rise since October. It will also be quicker than 3.5% in December and 2.9% a year ago.
The Philippine Statistics Authority will report the official January inflation data on Feb. 5.
The BSP expects inflation to average 3.2% this year, faster than the 2.6% print last year as it factors in higher food and oil prices.
A bond trader, meanwhile, noted that bids for yesterday’s offering were “not that strong,” which caused the tenor’s average rate to rise.
“One factor is the liquidity of the bond. It is not actively traded,” the trader said via Viber.
The BTr plans to borrow P140 billion from the local debt market this month: P80 billion via weekly auctions of Treasury bills and P60 billion from fortnightly T-bond offerings.
The government is looking to raise P3 trillion this year from domestic and external lenders to help fund its budget deficit seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga