THE GOVERNMENT fully awarded its offer of Treasury bills (T-bills) at mostly higher rates ahead of the release of July inflation data and expectations of more hikes from the Philippine central bank.
The Bureau of the Treasury (BTr) raised P15 billion as planned from its auction of T-bills on Monday, with bids reaching P43.31 billion.
Broken down, the Treasury made a full P5-billion award of 91-day securities as the tenor attracted P24.07 billion in bids. The average rate of the tenor went down by 18.3 basis points (bps) to 2.09% from the 2.273% fetched at the previous auction. Accepted rates ranged from 2.08% to 2.1%.
The government also borrowed P5 billion as planned via the 182-day securities as tenders reached P12.94 billion. The average rate of the tenor rose by 4.6 bps to 3.188% from the 3.142% fetched at the previous auction. Accepted rates ranged from 3.125% to 3.225%.
Lastly, the BTr raised P5 billion from the 364-day debt papers as programmed, with demand for the tenor reaching P6.29 billion. The tenor’s average rate rose by 12.4 bps to 3.48% from the 3.356% fetched at the previous auction, with the government accepting offers ranging from 3.35% to 3.7%.
At the secondary market prior to Monday’s auction, the 91-, 182- and 364-day T-bills were quoted at 2.2683%, 2.8857%, and 3.2775%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.
National Treasurer Rosalia V. de Leon said in a Viber message that the BTr made a full award of the T-bills on offer on Monday as demand remained strong even after the US Federal Reserve’s second straight 75-bp rate hike last week and expectations of another hawkish move by the Bangko Sentral ng Pilipinas (BSP) this month.
“[The] 91-day tenor declined by 18 bps as the peso … surged in last Friday’s close,” Ms. De Leon said. The local unit closed at P55.13 per dollar on Friday, gaining 69 centavos from its P55.82 finish on Thursday, based on Bankers Association of the Philippines data.
“Yields moved mixed, with demand heavily concentrated on the 91-day tenor as investors are on wait-and-see mode ahead of the July inflation data release this Friday,” the first trader said.
“Clearly, investors continue [to] demand higher rates for the six-month and one-year bills on expectations of more rate hikes from BSP,” the second trader said.
BSP Governor Felipe M. Medalla last week signaled a hike of 25 or 50 bps at their Aug. 18 meeting, although he ruled out another off-cycle increase. The central bank had raised rates by 75 bps in a surprise move on July 14 to contain sustained and broadening price pressures.
The Monetary Board has raised benchmark interest rates by a total of 125 bps so far this year as inflation remains elevated.
A BusinessWorld poll of 14 economists last week yielded a median estimate of 6.2% for July headline inflation, within the BSP’s forecast of 5.6% to 6.4% for the month.
If realized, this would be a tad faster than the 6.1% reading in June, which was already a near four-year high, as well as the 3.7% posted in July last year.
The Philippine Statistics Authority will release July inflation data on Aug. 5, Friday.
On Tuesday, the BTr will auction off P35 billion in fresh 3.5-year Treasury bonds (T-bonds).
The Treasury wants to raise P215 billion from the domestic market this month, or P75 billion through T-bills and P140 billion via T-bonds.
The government borrows from local and external sources to help fund a budget deficit capped at P1.65 trillion this year, equivalent to 7.6% of gross domestic product. — Diego Gabriel C. Robles