BTr sold ₧13.16B of T-bills amid demand for high yields

THE Bureau of the Treasury (BTr) sold P13.16 billion out of its P15-billion offering of Treasury bills (T-bills) on Monday as investors sought higher yields across all tenors.

After fully awarding government securities in two consecutive auction days last week, Monday’s auction results ended up mixed as the Treasury fully awarded the 91-day T-bills and partially award 182-day and 364-day debt papers.

All tenors fetched average yields above the benchmark secondary market rates.

The P5-billion offering of 91-day T-bills capped at an average rate of 1.876 percent; 2.4 basis points (bps) higher vis-à-vis the Bloomberg Valuation Service (BVAL) Reference rate of 1.852 percent.

Meanwhile, the 182-day and 364-day securities fetched average rates of 2.907 percent and 2.981 percent, respectively. The former jumped by 51bps while the latter soared by 28.8bps than the benchmark BVAL rates of 2.397 percent and 2.693 percent, respectively.

Had the Treasury fully-awarded the 182-day and 364-day T-bills, the average rates for the respective tenors would have hit 2.956 percent and 3.191 percent, respectively.

Nonetheless, the auction was more than twice oversubscribed, with total bids reaching P36.7 billion.

National Treasurer Rosalia V. De Leon said the auction committee’s decision was based on the Treasury’s reasonableness test and guidance from the Bangko Sentral ng Pilipinas (BSP) on the path of rate hikes.

In a bid to tame soaring inflation, the BSP has so far raised the interest rates by a total of 50bps this year: 25 each in its May 19 and June 23 policy meetings. These hikes have brought the policy rate to 2.5 percent.

But the BSP seems not to be done yet as Governor Felipe M. Medalla has said monetary authorities are prepared to unleash a more aggressive rate hike of another 50bps in its next policy meeting in August, noting that the central bank is “strongly committed to maintaining price stability.”

The government’s economic team under the Marcos administration is now expecting inflation to remain “elevated” in the coming months as fuel and food prices continue to escalate.

Last Friday, the Cabinet-level Development Budget Coordination Committee adjusted upward its inflation forecast for this year to 4.5 percent to 5.5 percent, higher than the 3.7 percent to 4.7 percent projection adopted by former President Duterte’s economic team in May this year.

For this month, the government is set to borrow P200 billion from the local debt market. To raise the amount, the Treasury said it will be auctioning off next month P140 billion in Treasury bonds and another P60 billion in T-bills.

As of end-May, the national government’s outstanding debt inched lower to P12.5 trillion from a record-high of P12.76 trillion as of end-April after a repayment of a P300-billion short-term, zero-interest loan from the central bank.