Gov’t makes partial award of T-bill offer

By A.M.C. Sy | BusinessWorld
January 4, 2023


THE GOVERNMENT partially awarded the Treasury bills (T-bills) it auctioned off on Tuesday, with rates mostly steady from the previous award amid expectations of faster inflation in December.

The Bureau of the Treasury (BTr) raised P13.65 billion from the T-bills it auctioned off on Tuesday, short of the P15-billion program, even as bids reached P30.255 billion.

Broken down, the Treasury raised P5 billion as planned via the 91-day T-bills with tenders reaching P14.65 billion. The average rate of the three-month papers went up by 6.6 basis points (bps) to 4.155% from the 4.089% quoted on Dec. 5, with accepted rates ranging from 4.125% to 4.2%.

The government also made a full P5-billion award of the 182-day securities as bids for the tenor hit P10.95 billion. The six-month papers was quoted at an average rate of 4.903%, down by 4.7 bps from the 4.95% fetched for the tenor on Dec. 5, with accepted rates ranging from 4.875% to 4.943%.

Meanwhile, the BTr raised just P3.65 billion from the 364-day debt papers as demand stood at only P4.655 billion, below the P5 billion on the auction block. The average rate of the one-year T-bill stood at 5.24%, 9 bps higher than the 5.15% fetched for the tenor for the last successful award on Nov. 28. Accepted yields ranged from 5.15% to 5.375%.

At the secondary market before Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 4.2269%, 4.9002%, and 5.099%, respectively, based on PHP Bloomberg Valuation Reference Rates data provided by the Treasury.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction that the government made a partial award of the 364-day T-bill to align the tenor’s average rate with the secondary market level.

“The market expects inflation to have peaked in December but still sees the BSP (Bangko Sentral ng Pilipinas) moderating the pace of rate hikes to bring inflation within its target level of 2-4%,” Ms. De Leon said.

A trader likewise said in a Viber message that the partial award of the one-year tenor shows that “investors are still wary of the inflation picture.”

The trader added that there was also pent-up demand for government debt as the BTr only held one T-bill auction in December.

“T-bill auction yields were also mixed as inflation could still pick up after the recent storm damage on agriculture by the shear line on some areas in Southern Philippines and also during the holiday season when demand is relatively higher, but only to ease after the holidays upon crossing the new year,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine Statistics Authority will release December inflation data on Thursday.

Headline inflation likely peaked last month as strong holiday demand and agricultural damage caused by typhoons may have driven food prices higher, analysts said.

A BusinessWorld poll of 11 analysts yielded a median estimate of 8.3% for December inflation. This is within the 7.8% to 8.6% forecast given by the Bangko Sentral ng Pilipinas (BSP) last week.

If realized, December would be the ninth straight month that inflation surpassed the BSP’s 2-4% target range. This print would likewise be faster than the 14-year high of 8% recorded in November.

This would bring the full-year inflation average to 5.8%, matching the BSP’s forecast for 2022.

On Wednesday, the BTr will offer P35 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of six years and nine months.

The Treasury wants to raise P200 billion from the domestic market in January, or P60 billion through T-bills and P140 billion via T-bonds.

The government borrows from domestic and external sources to finance its budget deficit, which is expected to reach P1.47 trillion this year or 6.1% of gross domestic product. — A.M.C. Sy