Gov’t makes partial award of T-bills as rates rise

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THE GOVERNMENT made a partial award of the Treasury bills (T-bill) on offer yesterday, even with yields climbing across all tenors as investors await the possible rate hike by the local central bank following the faster-than-expected August inflation print.

The Bureau of the Treasury (BTr) raised just P13.47 billion during the T-bills auction on Monday, falling short of the P15 billion it intended to borrow.

This, even as the offer remained oversubscribed as total tenders amounted to P21.9 billion, lower than last week’s P27.5 billion.

Broken down, the government partially awarded the 91-day T-bills on offer, borrowing just P2.47 billion out of the P4 billion it wanted to raise. Total bids from banks reached P5.78 billion and the average rate picked up to 3.549%, 32.4 basis points (bps) higher than the 3.225% logged in the previous auction.

Meanwhile, the BTr awarded P5 billion as planned in the 182-day debt papers versus tenders totaling P8.075 billion. The average yield ended 25.2 bps higher at 4.353% from last week’s 4.125%.

The Treasury also borrowed the programmed P6 billion via the 364-day T-bills, with demand reaching P8.051 billion. The papers were quoted at 5.137%, up 23.8 bps from the 4.899% booked the previous offer.

At the secondary market ahead of the auction yesterday, the three- and six-month papers were quoted at 4.2804% and 4.4054%, respectively, while the yield on the one-year T-bills was at 5.4179%.

At the close of trading, all tenors rallied to fetch lower rates. The 91-day papers yielded 3.5298%, the 182-day debt fetched 4.368% and the 364-day T-bills were quoted at 4.9662%.

National Treasurer Rosalia V. de Leon said rates climbed across-the- board as the inflation figure triggered bets of another hike from the Bangko Sentral ng Pilipinas (BSP).

“What do you expect? [Investors] are already saying that the BSP should be hiking by another 50 basis points,” Ms. De Leon told reporters following the auction.

The average rise in prices of widely used goods picked up to a nine-year high of 6.4% in August due to higher food and oil prices. This was faster than July’s 5.7% as well as the 2.6% tallied in the same month last year.

On Friday, BSP Governor Nestor A. Espenilla, Jr. hinted on another round of tightening, saying that the monetary authority will take “strong immediate action” to respond to emerging threats to prices and inflation expectations.

Mr. Espenilla added that the Monetary Board may meet ahead of the Sept. 27 meeting to address such issues.

Ms. De Leon added that the elevated bids will likely persist until the central bank convenes since the market is expecting another hike.

“That would go on because they’re anticipating… Analysts would also want to see the BSP to anchor inflationary expectations,” she said.

Meanwhile, a trader said the Treasury tried to catch up with the bids given the “spike” in inflation last month.

“We saw a huge pickup especially in the 91-day [tenor] since bids are pulled back. They tried to catch up,” the trader said in a phone interview.

The government is set to borrow P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds. — Karl Angelo N. Vidal