Gov’t partially awards T-bills at lower rates

THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it auctioned off on Monday at lower average rates amid expectations of slower inflation in March.

The Bureau of the Treasury (BTr) raised just PHP 12.8 billion from its offer of T-bills on Monday, below the PHP 15-billion program, even as total bids reached PHP 34.19 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 totaled PHP 13.94 billion. The average rate of the three-month paper went down by 10.40 basis points (bps) to 5.045% from the 5.149% seen at last week’s auction, with the accepted rates ranging from 5.03% to 5.06%.

The BTr raised likewise raised PHP 5 billion as planned from the 364-day debt papers as bids reached PHP 9.815 billion. The average rate of the one-year paper went down by 1 bp to 5.977% from 5.987% last week. Accepted yields were from 5.43% to 6%.

Meanwhile, the government borrowed just PHP 2.8 billion via the 182-day securities, lower than the PHP 5-billion plan, despite demand for the tenor reaching PHP 10.435 billion. The six-month T-bill was quoted at an average rate of 5.674%, inching down by 0.3 bp from 5.677% the previous week, with accepted rates ranging from 5.668% to 5.68%.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 5.0501%, 5.6771%, and 6.0287%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the BTr.

The government made a partial award of the six-month T-bills “to guide rates within secondary market levels,” National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction.

T-bill rates were lower across the board as the market expects headline inflation to have eased further in March, a trader said in a Viber message.

“Treasury bill average auction yields finally corrected lower ahead of the latest inflation data that could ease year on year due to higher base effects,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine Statistics Authority will release March inflation data on April 5, Wednesday.

A BusinessWorld poll of 16 analysts yielded a median estimate of 8.1% for March headline inflation, near the upper end of the 7.4% to 8.2% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, this will be down from the 8.6% in February, but faster than the 4% print in March 2022. March would also be the 13^th straight month that inflation was above the BSP’s 2-4% target for the year.

“However, the announced cut in oil output by OPEC (Organization of the Petroleum Exporting Countries) adds another challenge to slaying the ugly head of inflation,” Ms. De Leon added.

Saudi Arabia and other OPEC+ oil producers on Sunday announced further oil output cuts of around 1.16 million barrels per day (bpd), in a surprise move that analysts said would cause an immediate rise in prices and the United States called inadvisable, Reuters reported.

The pledges bring the total volume of cuts by OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, to 3.66 million bpd according to Reuters calculations, equal to 3.7% of global demand.

Sunday’s development comes a day before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, and which had been expected to stick to 2 million bpd of cuts already in place until the end of 2023.

The OPEC+ cuts caused oil price increases of more than 6% on Monday.

On Tuesday, the BTr will offer PHP 25 billion in reissued seven-year Treasury bonds (T-bonds) that have a remaining life of two years and 10 months.

The Treasury wants to raise PHP 160 billion from the domestic market this month, or PHP 60 billion via T-bills and PHP 100 billion via T-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 with Reuters