RATES OF Treasury bills (T-bills) on offer today (Oct. 12) may remain unchanged or move sideways as investors remain awash with cash and cautious over long-term securities.

The Bureau of the Treasury (BTr) will offer P20 billion worth of T-bills: P5 billion each in 91-day and 182-day securities and P10 billion in 364-day papers.

A trader said in an e-mail that rates for short-term debt papers may decline by five basis points (bps) or end flat as the market remains liquid.

“Investors will continue to put their cash in shorter tenors as they avoid looming risks, including lingering cases of the coronavirus disease 2019 (COVID-19) and lack of vaccine against it,” the trader said.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail that T-bills rates will continue to reflect liquidity among investors as there is now less concern on the inflation outlook.

“Shorter duration exposure can be attributed to sustained preference for liquid assets during the crisis period rather than higher inflation expectations. Until sellers’ volume recedes, the buy-on-dips strategy may prevail,” Mr. Asuncion said over the weekend.

The Treasury last week borrowed P22 billion via T-bills, more than its original program of P20 billion, as the government hiked its award of the smallest tenor to accommodate more small investors. The offering was almost five times oversubscribed, with bids reaching P98.858 billion.

Broken down, the government borrowed P7 billion via the 91-day T-bills versus its original program of P5 billion as it accepted more bids from small investors. The three-month papers fetched an average rate of 1.116%, down by 0.5 bp from the 1.121% seen in the previous auction.

The government also awarded P5 billion as planned in 182-day T-bills as tenders for the tenor totalled P29.164 billion. The six-month papers fetched an average rate of 1.6%, marginally lower than the 1.601% seen the prior week.

Lastly, the Treasury likewise borrowed the programmed P10 billion via 364-day papers as total tenders reached P44.459 billion. The one-year debt was quoted at an average rate of 1.8%, declining by 5.8 bps from the 1.858% fetched in the previous offering.

At the secondary market on Friday, the three-month, six-month and one-year T-bills fetched yields of 1.177%, 1.589%, and 1.827%, respective.

Meanwhile, inflation eased for the second straight month in September to its slowest level in four months on the back of moderating prices in the heavily weighted food and nonalcoholic beverages, the Philippine Statistics Authority (PSA) reported on Tuesday.

Preliminary PSA data showed headline inflation stood at 2.3% in September, the slowest since May’s 2.1%. This was also slower than the 2.4% seen in August, but faster than the 0.9% print in September 2019.

The latest reading, which matched the median estimate of 2.3% in a BusinessWorld poll, fell within the Bangko Sentral ng Pilipinas’ (BSP) 1.8%-2.6% forecast range for September.

Headline inflation averaged at 2.5% in the first nine months. This was higher than the BSP’s revised forecast of 2.3% for 2020 but within its 2-4% target.

The Treasury is looking to raise P140 billion from the domestic market this month: P80 billion in weekly T-bill auctions and P60 billion in fortnightly Treasury bond auctions.

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

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