THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Tuesday as yields ended mixed due to expectations of faster inflation and a sluggish economy.

The Bureau of the Treasury (BTr) borrowed P20 billion as planned via the T-bills as the offer was almost four times oversubscribed, with bids amounting to P75.906 billion.

Broken down, the BTr borrowed the programmed P5 billion from the 91-day T-bills as tenders reached P19.321 billion. The three-month debt fetched an average rate of 1.006%, up by two basis points (bps) from the 0.986% seen in the previous auction.

The Treasury also awarded P5 billion as planned in 182-day debt as bids amounted to P20.41 billion. The six-month papers were quoted at an average rate of 1.386%, inching up by 0.1 bp from the 1.385% logged in last week’s offering.

Lastly, the government raised P10 billion as programmed via the 364-day securities as tenders totaled P36.175 billion. The average rate of the one-year securities stood at 1.693%, slipping by 0.2 bp from the 1.695% logged in the previous auction.

National Treasurer Rosalia V. de Leon said the yields on the three-month and six-month papers rose yesterday as investors expect inflation to have accelerated slightly last month.

“Increase in 91-day [debt’s rate] was due to expectations of a higher inflation print in November following a spate of typhoons,” Ms. De Leon told reporters via Viber after the auction.

Headline inflation in November likely quickened as a recent spate of typhoons pushed the prices of food and agricultural products higher, economists said.

A BusinessWorld poll of 13 analysts conducted last week yielded a median estimate of 2.7%, near the low end of the 2.4-3.2% forecast range of the Bangko Sentral ng Pilipinas (BSP) but still within the 2-4% target for the year.

If realized, the median estimate will be faster than the 2.5% logged in October and the 1.3% seen in November 2019. The BSP expects inflation to average 2.4% this year. The consumer price index rose 2.5% as of October year to date.

The November inflation report will be released by the Philippine Statistics Authority on Friday (Dec. 4).

A trader said via e-mail that investors are becoming more wary of inflation risks.

The trader also noted that the slight decline in the rate of the one-year T-bills reflected market expectations of a slow economic rebound.

“The economy will probably return to its pre-pandemic level only in the last quarter next year as cases of coronavirus continue to linger and some doubts on the safety of some vaccines against the disease remain,” the trader said.

The Philippine economy remained in recession in the third quarter as gross domestic product (GDP) contracted by 11.5%, following the record 16.9% decline in the three months ended June.

This brought the GDP performance for the first nine months to a 10% contraction. The government expects the economy to shrink by 4.5-6.6% this year.

The Treasury plans to borrow P120 billion from domestic lenders in December: P60 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond (T-bonds) offerings.

On Wednesday, the government will auction off P30 billion in reissued three-year T-bonds which have a remaining life of two years and nine months.

The Treasury is also offering another tranche of Premyo bonds to raise at least P3 billion. The offer period is set to run from Nov. 11 to Dec. 18.

The government wants to raise around P3 trillion this year from local and foreign lenders to help fund its budget deficit, which is expected to hit 9.6% of the country’s gross domestic product.