Gov’t partially awards T-bills as rates rise further

THE GOVERNMENT partially awarded the Treasury bills (T-bills) it offered on Monday as rates continued to rise on expectations of further rate hikes from the US Federal Reserve.

The Bureau of the Treasury (BTr) raised just P13.9 billion via the short-term securities auctioned off on Monday or less than the programmed P15 billion, even as the offering attracted P25.91 billion in bids.

Broken down, the Treasury awarded just P4.87 billion in 91-day T-bills versus the P5 billion on offer, even as total bids reached P9.47 billion. The average rate for the three-month T-bill climbed by 23.1 basis points (bps) to 1.536% from the 1.305% fetched during the previous auction.

The government also made a partial P4.03-billion award of 364-day papers versus the P5-billion offer even as bids totaled P7.7 billion. The average yield on the one-year paper went up by 5.8 bps to 1.792% from the 1.734% fetched previously.

Meanwhile, the BTr borrowed P5 billion as planned via the 182-day T-bills that attracted P8.74 billion in tenders. The tenor fetched an average yield of 1.607%, up by 14.9 bps from the 1.458% seen previously.

At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 1.2005%, 1.4172% and 1.7486%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters that T-bill rates continued to rise on expectations of further actions from the US Federal Reserve to curb inflation.

Still, the climb in yields was “tempered by expectations that BSP (Bangko Sentral ng Pilipinas) will keep rates steady,” Ms. De Leon said.

Meanwhile, a trader said via Viber that the T-bill yields were within expectations as the country moves towards policy normalization.

“While (the) market is pretty much assured of steady policy rate domestically, the indicators for consumer price index (are) not that favorable moving forward,” the trader said.

The trader noted that Dubai crude averaged at $95 per barrel year to date, which could make inflation to come in at 4%, based on the BSP’s sensitivity analysis.

“That, coupled with aggressive Federal Open Market Committee guidance, there will be continued pressure on domestic rates.”

The Fed last week raised rates by a quarter percentage point, the first time since 2018, to help combat rising inflation. It penciled in six more increases for the rest of 2022.

The US consumer price index was at 7.9% year on year in February, the fastest in four decades.

Global oil prices have been surging after the Feb. 24 Russian invasion of Ukraine, further raising inflation concerns here and abroad.

Despite inflationary pressures, the BSP is expected to keep benchmark interest rates steady at its March 24 meeting as it supports economic recovery, 15 out of 17 analysts polled by BusinessWorld said.

The BTr wants to raise P250 billion from the domestic market this month, or P75 billion via T-bills and P175 billion from T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.7% of gross domestic product this year. — Jenina P. Ibañez