BTr makes partial award of T-bill offering

THE BUREAU of the Treasury (BTr) partially awarded the Treasury bills (T-bills) it auctioned off on Monday, with rates mostly rising as investors awaited the release of third-quarter gross domestic product (GDP) growth data and amid expectations that borrowing costs will be steady.

The government raised PHP 13.22 billion via the T-bills it auctioned off on Monday, short of the PHP 15-billion program, even as total bids reached PHP 32.316 billion or double the amount on offer.

Broken down, the Treasury made a full PHP 5-billion award of the 91-day T-bills, with tenders for the tenor reaching PHP 14.79 billion. The three-month paper was quoted at an average rate of 6.352%, 0.9 basis point (bp) above the 6.343% seen last week. Accepted rates ranged from 6.334% to 6.374%.

Meanwhile, the government borrowed only PHP 4.5 billion through the 182-day securities, short of the PHP 5-billion program, despite bids for the paper reaching PHP 7.176 billion. The average rate for the six-month T-bill stood at 6.536%, up by 7.4 bps from the 6.462% quoted last week, with accepted yields ranging from 6.495% to 6.55%.

The government raised just PHP 3.72 billion via the 364-day debt papers, short of the PHP 5-billion plan, despite bids reachingPHP billion. The average rate of the one-year T-bill inched down by 0.1 bp to 6.591% from the 6.592% fetched last week. Accepted yields were from 6.57% to 6.6%.

Yields fetched for the 91- and 182- day T-bills were “unusually” higher than secondary market levels, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 6.1710%, 6.3968%, and 6.5828%, respectively, based on PHP BVAL Reference Rates data published on the Philippine Dealing System’s website.

“The higher T-bill rates today reflected local optimism ahead of the Philippine GDP report this week,” a trader said in an e-mail on Monday.

A BusinessWorld poll of 18 economists and analysts last week yielded a median estimate of 4.9% for GDP growth in the July-September period.

If realized, this would be faster than the preliminary 4.3% growth recorded in the second quarter, but slower than 7.7% in the July-September period a year ago.

This would bring the nine-month average GDP expansion to 5.2%, still below the government’s 6-7% full-year growth target.

The Philippine Statistics Authority (PSA) will release third-quarter GDP data on Thursday.

The BTr partially awarded the T-bills on Monday due to the higher yields after Finance Secretary Benjamin E. Diokno said the central bank might be done with its tightening cycle, Mr. Ricafort said.

The Bangko Sentral ng Pilipinas (BSP) is likely to keep benchmark interest rates steady at its meeting on Nov. 16 following the off-cycle increase implemented last month and amid slowing inflation, Finance Secretary and Monetary Board member Benjamin E. Diokno said on Monday.

The BSP on Oct. 26 hiked its policy rate by 25 bps to a fresh 16-year high of 6.5% in an out-of-cycle move and signaled that it is ready to deliver “follow-through policy action” if necessary to bring inflation back its 2-4% target. Since May 2022, the central bank has hiked its key rate by a cumulative 450 bps.

On Tuesday, the BTr will offer PHP 30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of six years and eight months.

The BTr plans to borrow PHP 225 billion from the domestic market this month, or PHP 7 billion via T-bills and PHP 150 billion via T-bonds.

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