BTr partially awards Treasury bills at higher rates

THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it auctioned off on Monday as rates were higher across all tenors as headline inflation picked up to a new 14-year high in January.

The Bureau of the Treasury (BTr) raised P14.6 billion from the T-bills on Monday, short of the P15-billion program, even as bids reached P32.182 billion or more than twice as much as the amount on offer.

Broken down, the Treasury raised P5 billion as planned via the 91-day T-bills, with tenders reaching P8.856 billion. The average rate of the three-month paper went up by 4.4 basis points (bps) to 4.23% from the 4.186% quoted for the tenor last week, with accepted rates ranging from 4.15% to 4.313%.

The BTr also made a full P5-billion award of the 364-day debt papers as demand for the tenor reached P15.55 billion. The average rate of the one-year T-bill rose to 5.298%, inching up by 0.6 bp from the 5.292% seen last week. Accepted yields ranged from 5.28% to 5.315%.

Meanwhile, the government borrowed just P4.6 billion from the 182-day securities, below the P5-billion plan, even as bids for the tenor reached P7.776 billion. The six-month paper was quoted at an average rate of 4.949%, up by 8.2 bps from the 4.867% fetched the previous week, with accepted rates from 4.91% to 4.975%.

“Except for the 182-day T-bill, the auction committee made full awards as rates were lower than comparable secondary levels,” National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction.

At the secondary market before Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 4.3439%, 4.9379%, and 5.3252%, respectively, based on PHP Bloomberg Valuation Reference Rates data provided by the Treasury.

A trader said in a Viber message that the increase in T-bill yields “can be attributed to the higher-than-expected inflation data.”

“The Treasury bill average auction yields were slightly higher week on week after the latest higher-than-expected inflation at a new 14-year high of 8.7%,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

Headline inflation accelerated to a new 14-year high of 8.7% in January as food prices continued to surge, the Philippine Statistics Authority reported last week.

This was faster than the 8.1% print in December 2022 and 3% in the same month last year. It also marked the 10^th consecutive month that inflation was above the Bangko Sentral ng Pilipinas’ 2-4% target for the year.

“The T-bill auction yields were also slightly higher week on week amid the ongoing RTB (retail Treasury bond) offering that could siphon off some of the excess liquidity from the financial system and add to the supply of government securities in the market,” Mr. Ricafort added.

The government last week raised an initial P162.18 billion from the rate-setting auction for its offer of 5.5-year RTBs. Tenders hit P196.109 billion, or more than six times the P30 billion on the auction block. The RTBs fetched a coupon rate of 6.125%.

The offer period for the retail bonds is set to run until Feb. 17, while settlement is on Feb. 22.

The BTr wants to raise P130 billion from the domestic market this month, or P60 billion via T-bills and P70 billion via Treasury bonds (T-bonds). The borrowing program for T-bonds was initially at P140 billion but the Treasury canceled two auctions to make way for its RTB offer.

The government borrows from domestic and external sources to finance its budget deficit, which is capped at 6.1% of gross domestic product this year. — AMCS