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

THE GOVERNMENT partially awarded the Treasury bills (T-bills) it offered on Monday as investors asked for higher rates due to rising oil prices and ahead of the expected US Federal Reserve hike this week.

The Bureau of the Treasury (BTr) raised just P9.14 billion via the short-term securities or less than the programmed P15 billion even as the offering attracted P23.35 billion in bids.

Broken down, the Treasury awarded just P3.04 billion in 91-day T-bills even as total bids reached P8.96 billion for the P5 billion on offer. The average rate for the three-month T-bill climbed by 40.6 basis points (bps) to 1.305% from the 0.899% fetched during the previous auction.

The BTr also awarded only P3 billion in 182-day T-bills that attracted P7.22 billion in tenders versus the P5-billion program. The tenor fetched an average yield of 1.458%, up by 30.1 bps from the 1.157% seen previously.

The government likewise made a partial P3.1-billion award of the 364-day papers versus the P5-billion offer even as bids totaled P7.17 billion. The average yield on the one-year paper went up by 16.6 bps to 1.734% from the 1.568% fetched previously.

At the secondary market prior to the auction on Monday, the 91- 182- and 364-day T-bills were quoted at 1.1362%, 1.2738% and 1.6577%, 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 all T-bill tenors were partially awarded as rates continued to climb due to the surge in oil and commodity prices due to the war between Russia and Ukraine.

Yields also went up as markets priced in the anticipated US Federal Reserve rate hike this week, she said.

Market players were defensive amid geopolitical tensions between Ukraine and Russia and ahead of the US Federal Reserve meeting this week, a trader said.

Oil prices have been surging since Russia invaded Ukraine on Feb. 24, but slipped on Monday amid diplomatic negotiations to end the war, Reuters reported.

Brent crude futures fell by 2.7% to $109.62 a barrel on Monday, while US West Texas Intermediate futures declined by 2.8% to $106.23 per barrel.

Meanwhile, US Federal Reserve Chairman Jerome H. Powell previously said he is inclined to support a 0.25% rate hike at the upcoming March 15-16 meeting of the Federal Open Market Committee.

Mr. Powell has also said that the Fed could raise rates faster in the next meetings if inflation does not ease. The US consumer price index rose to a four-decade high of 7.9% year on year in February as gasoline and food prices increased.

The government had rejected all T-bill and Treasury bond (T-bond) bids in the previous two weeks due to rising rates.

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 with Reuters