THE GOVERNMENT upsized the volume of Treasury bills (T-bills) it awarded on Monday as strong demand persisted despite the expected uptick in inflation on the back of high market liquidity.
The Bureau of the Treasury (BTr) raised P24 billion from the T-bills it offered on Monday, higher than its program of P20 billion, after it accepted more non-competitive bids for the 91- and 182-day debt papers.
The offering was more than five times oversubscribed as it attracted P103.646 billion in tenders. However, this was lower than the P112 billion seen in last week’s T-bill auction.
Broken down, the BTr borrowed P7 billion via the 91-day debt, more than the P5-billion program, as bids reached P19.56 billion. The three-month papers fetched an average rate of 0.917%, down by 5.2 basis points (bps) from the 0.969% seen during last week’s auction.
The government also raised P7 billion via the 182-day T-bills, more than the P5-billion offering, from tenders worth P33.456 billion. The average rate of the six-month debt declined by 11.3 bps to 1.21% from the previous rate of 1.323%.
Lastly, the Treasury made a full P10-billion award of the 364-day securities it offered on Monday from tenders totaling P50.63 billion. The one-year T-bills were quoted at an average rate of 1.492%, down 5 bps from 1.542% last week.
At the secondary market prior to the auction, the 91-, 182- and 364-day T-bills were quoted at 1.0775%, 1.2353% and 1.5319%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.
“Rates fell in spite of higher inflation for January as the market is flushed with funds,”National Treasurer Rosalia V. de Leon told reporters via Viber after the auction.
Headline inflation 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 3.3-4.1% estimate by the Bangko Sentral ng Pilipinas (BSP) for the month but near the upper end of the 2-4% annual target.
If realized, this would be the fastest since the 3.8% print 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 central bank expects inflation to average 3.2% this year, faster than 2.6% last year as it factors in the rise in food and oil prices, but still falling within its 2-4% target.
“We don’t see any effect on T-bills even if there’s a higher CPI (consumer price index) expectations because of the volume. There are still funds that need that yield,” a bond trader said via Viber yesterday.
On Tuesday, the Treasury will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and five months. The notes bear a coupon of 2.875% and an average rate of 2.724%.
The BTr plans to borrow P140 billion from the local debt market this month: P80 billion via weekly auctions of T-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