Gov’t fully awards T-bill offering

The government made a full award of the Treasury bills (T-bills) it offered on Monday even as rates continued to rise amid hawkish signals from the Bangko Sentral ng Pilipinas (BSP) and before the release of 2023 Philip-pine gross domestic product (GDP) data.

The Bureau of the Treasury (BTr) raised PHP 15 billion as planned via its offering of T-bills on Monday as total bids reached PHP 38.137 billion, or more than twice the amount on the auction block.

Broken down, the Treasury made a full PHP 5-billion award of the 91-day T-bills as tenders for the tenor reached PHP 11.46 billion. The three-month paper was quoted at an average rate of 5.398%, 9.2 basis points (bps) higher than the 5.306% seen last week. Accepted rates ranged from 5.300% to 5.424%.

The government also raised PHP 5 billion as planned from the 182-day securities as bids stood at PHP 12.37 billion. The average rate for the six-month T-bill was at 5.81%, up by 4.4 bps from the 5.766% fetched last week, with accept-ed rates at 5.795% to 5.843%.

Lastly, the BTr borrowed the programmed PHP 5 billion via the 364-day debt paper as demand for the tenor totaled PHP 14.307 billion. The average rate of the one-year T-bill went up by 3.9 bps to 6.076% from the 6.037% quoted last week. Accepted yields were from 6.02% to 6.10%.

At the secondary market on Monday before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.422%, 5.7508%, and 6.0408%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

T-bill rates went up on Monday following hawkish signals from the central bank chief, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“T-bill auction yields were higher ahead of the latest Philippine GDP data on Jan. 31, as a stronger GDP data could support hawkish monetary policy stance…,” Mr. Ricafort said.

“Awarded T-bill rates increased today amid growing prospects of delayed BSP policy rate cuts,” a trader said in an e-mail on Monday.

BSP Governor Eli M. Remolona, Jr. reiterated on Friday that a rate cut is unlikely within the first semester, and signaled that the Monetary Board could even increase rates if economic growth picked up in the last quarter of 2023.

The BSP hiked borrowing costs by 450 bps from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.

Meanwhile, a BusinessWorld poll of 20 economists yielded a median estimate of 5.7% for fourth-quarter gross domestic product (GDP) growth.

If realized, this would be slower than the 5.9% growth in the third quarter and the 7.1% expansion in the same period in 2022.

For full-year economic expansion, the BusinessWorld poll yielded a median forecast of 5.5%, missing the Development Budget Coordination Committee’s 6-7% full-year target. This is also below the 7.6% expansion in 2022 and the slowest since the 9.5% contraction in 2020.

The Philippine Statistics Authority will release fourth-quarter and full-year 2023 GDP data on Wednesday.

Monday’s T-bill auction was the last one for January and brought the total amount raised from the short-tenored securities for the month to PHP 81 billion, higher than the PHP 75-billion program as the BTr held tap fa-cility auctions to accommodate strong demand for government debt.

Overall, the government raised PHP 211 billion via T-bills and Treasury bonds (T-bonds) in January, above the PHP 195-billion plan.

On Tuesday, the BTr will offer PHP 30 billion in reissued three-year T-bonds with a remaining life of two years and 11 months.

The auction is part of its February borrowing plan, under which it plans to raise PHP 210 billion from the domestic market, or PHP 60 billion via T-bills and PHP 150 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year or PHP 1.39 trillion. — A.M.C. Sy