THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday as rates on most tenors inched lower on expectations of slower inflation in November.

The Bureau of the Treasury sold P10 billion in T-bills as planned on Monday, with demand reaching P41.285 billion or more than four times the offer. This likewise beat the P37.65 billion in bids last week.

Broken down, the BTr borrowed P2 billion as planned via the 92-day securities from P13.3 billion in tenders. The tenor fetched an average rate of 1.155%, down by 0.9 basis point (bp) from the 1.164% quoted previously.

Meanwhile, the government raised P3 billion as planned from the 183-day debt papers, which attracted P16.012 billion in tenders. The average yield on the six-month papers dipped by 0.6 bp to 1.443% from 1.449% last week.

Lastly, the government made a full P5-billion award of its offer of 365-day T-bills, which fetched bids worth P11.973 billion. The average rate of the one-year debt papers inched up by 0.7 bp to 1.643% from 1.636% in the prior auction.

At the secondary market prior to the auction on Monday, the three-month, six month, and one-year papers were quoted at 1.2229%, 1.4583%, and 1.6596%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon said in a Viber message that investors remained biased towards shorter tenors due to uncertainties brought by the Omicron variant of the coronavirus disease 2019 (COVID-19) and ahead of the release of the November inflation report.

Headline inflation likely eased in November amid a slower rise in food prices and a drop in pump prices, analysts said.

A BusinessWorld poll of 18 analysts yielded a median estimate of 4% for the November inflation, which is near the upper end of the 3.3% to 4.1% estimate given by the Bangko Sentral ng Pilipinas (BSP).

If realized, last month’s consumer price index will be within the 2-4% target of the BSP and slower than the 4.6% in October but quicker than the 3.7% logged a year earlier.

The Philippine Statistics Authority will release the November inflation report on Tuesday, Dec. 7.

The BSP has kept benchmark rates at record lows since 2020 to support the economy’s recovery, and is expected to remain accommodative at least until the end of the year.

A trader said the market also factored in the US jobs data released on Friday and its impact on the Federal Reserve’s policy stance.

“The market is still very much pondering on the timing and pace of US Federal Reserve’s possible tightening which may also impact interest rate movements here in the country,” a trader said in a Viber message.

The US Labor department on Friday reported that the unemployment rate dropped to a 21-month low of 4.2% in November, reflecting that the labor market is tightening, Reuters reported.

Meanwhile, nonfarm payrolls increased by 210,000 last month, the lowest increase since December 2020.

Fed officials have recently become more hawkish in their statements, citing the need to consider a faster tapering of its asset purchases as economic conditions improve.

Meanwhile, another trader said in a Viber message that T-bill yields moved sideways as bids reflected demand from those that are looking for alternative investments.

For this month, the Treasury is looking to borrow P70 billion from the domestic market: P30 billion via T-bills and P40 billion from Treasury bonds.

The government wants to raise P3 trillion from local and external sources this year to fund a budget deficit seen to hit 9.3% of the country’s gross domestic product. — L.W.T. Noble with Reuters