Gov’t fully awards T-bills at slightly higher rates

The government made a full award of the Treasury bills (T-bills) it offered on Monday even as rates rose due to expectations that headline inflation picked up last month.

The Bureau of the Treasury (BTr) raised PHP 15 billion as planned from its offering of T-bills on Monday as total bids reached PHP 36.888 billion, or more than twice the amount on the auction block.

Broken down, the Treasury raised PHP 5 billion as programmed from the 91-day T-bills as tenders for the tenor reached PHP PHP 9.428 billion. The three-month paper was quoted at an average rate of 5.778%, 6.8 basis points (bps) higher than the 5.71% seen last week. Accepted rates ranged from 5.75% to 5.799%.

The government likewise made a full PHP 5-billion award of the 182-day securities as bids for the tenor reaching PHP 13.31 billion. The average rate for the six-month T-bill stood at 5.995%, up by 2.4 bps from the 5.971% fetched for a partial award last week, with accepted rates at 5.989% to 6%.

Lastly, the BTr borrowed the programmed PHP 5 billion via the 364-day debt papers as demand totaled PHP 14.16 billion. The average rate of the one-year T-bill inched up by 1.5 bps to 6.1% from the 6.085% quoted last week. Accepted yields were from 6.089% to 6.125%.

At the secondary market on Monday before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7292%, 5.9575%, and 6.1088%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the BTr.

The T-bills fetched higher rates on Monday amid expectations of slightly faster February inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Despite the increase in yields week on week, the T-bill rates seen on Monday were still lower than comparable BVAL levels, which led the Treasury to make a full award, Mr. Ricafort said.

“Market participants were cautious ahead of the inflation data [on Tuesday],” a trader likewise said by phone.

Headline inflation likely picked up in February amid higher prices of key commodities like food, electricity and fuel, analysts said.

A BusinessWorld poll of 16 analysts yielded a median estimate of 3% for the February consumer price index (CPI), within the 2.8-3.6% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, February inflation would be slightly faster than the 2.8% print in January but slower than 8.6% in the same month a year ago. It would also mark the first time that inflation picked up on a month-on-month basis since September 2023. 

Still, February would be the third straight month that the CPI was within the BSP’s 2-4% annual target.

The Philippine Statistics Authority will release February inflation data on Tuesday, March 5.

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 10 months.

The Treasury is looking to raise PHP 180 billion from the domestic market this month, or PHP 60 billion from T-bills and PHP 120 billion via T-bonds.

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