Gov’t partially awards T-bills as rates rise

THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it auctioned off on Monday amid tepid demand, with yields inching closer to benchmark borrowing costs.

The Bureau of the Treasury (BTr) raised just PHP 10.572 billion from its offer of T-bills on Monday, lower than the PHP 15-billion program, with total bids reaching PHP 17.553 billion.

Broken down, the Treasury borrowed just PHP 2.607 billion from the 91-day T-bills, with tenders reaching only PHP 4.417 billion or below the PHP 5-billion plan. The average rate of the three-month paper rose by 31.90 basis points (bps) to 5.869% from the 5.55% seen at last week’s auction, with accepted yields ranging from 5.745% to 5.95%.

The BTr likewise raised only PHP 3.236 billion via the 182-day debt papers, lower than the PHP 5-billion program, despite bids reaching PHP 6.146 billion. The average rate of the six-month T-bill went up by 18.10 bps to 5.993% from 5.812% last week. Accepted yields were from 5.89% to 6.15%.

Lastly, the government made a partial PHP 4.729-billion award of the 364-day securities, short of the PHP 5-billion plan, even as demand for the tenor stood at PHP 6.99 billion. The one-year paper was awarded at an average rate of 6.209%, rising by 13.60 bps from 6.073% the previous week, with accepted rates ranging from 6.10% to 6.25%.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 5.648%, 5.919%, and 6.1475%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

“The Auction Committee partially awarded bids for Treasury bills (T-bills) at today’s auction. Average rates for the 91-, 182-, and 364-day T-bills were capped at 5.869%, 5.993% and 6.209%, respectively,” the BTr said in a statement on Monday.

“The auction was 1.2 times oversubscribed with total tenders reaching PHP 17.6 billion. With its decision, the Committee raised PHP 10.6 billion of the PHP 15-billion total offering,” it added.

The Treasury made a partial award of its offer as investors wanted higher yields, a trader said in a Viber message.

The trader noted that T-bill rates are almost at par with the Bangko Sentral ng Pilipinas’ (BSP) key rate already.

“Treasury bill auction yields continued to go up week-on-week, moving closer to the local policy rate of 6.25%,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.

The BSP’s policy-setting Monetary Board last month hiked benchmark interest rates by 25 bps to help bring down elevated inflation. This brought its key rate to 6.25%.

Since May 2022, the central bank raised borrowing costs by a total of 425 bps.

The BSP’s next policy meeting will be held on May 18.

BSP Governor Felipe M. Medalla said this month that the Monetary Board may consider pausing its tightening cycle at its meeting next month if inflation eases further in April.

Headline inflation slowed to 7.6% in March from 8.6% in February, bringing the first-quarter average to 8.3%, well above the central bank’s forecast of 6% and 2-4% target for this year.

The Philippine Statistics Authority will release April inflation data on May 5.

Monday’s T-bill auction was the last for April. The Treasury raised PHP 46.447 billion via T-bills out of the PHP 60-billion program for the month after it made partial awards at all four auctions.

On Tuesday, the BTr will offer PHP 25 billion in fresh seven-year Treasury bonds.

The government borrows from local and external sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — By A.M.C. Sy