THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday at slightly higher rates across the board amid inflation concerns stemming from developments at home and abroad.
The Bureau of the Treasury (BTr) raised P15 billion as planned from the T-bills it auctioned off as bids reached P47.155 billion, over three times higher than the offered amount but lower than P51.665 billion in tenders recorded last week.
Broken down, the Treasury borrowed the programmed P5 billion via the 91-day T-bills as tenders for the tenor reached P17.25 billion. The three-month paper was quoted at an average rate of 5.647%, up by 1.6 basis points (bps) from 5.631% last week, with accepted rates ranging from 5.638% to 5.65%.
The government likewise made a full P5-billion award of the 182-day securities as bids hit P14.745 billion. The average rate of the six-month T-bill rose by 2 bps to 5.882% from 5.862% previously, with accepted bid yields at 5.862% to 5.914%.
Lastly, the BTr raised P5 billion as planned from the 364-day debt as demand for the tenor totaled P15.16 billion. The average rate of the one-year debt increased by 3.4 bps to 5.905% from 5.871% in the prior week. Accepted rates were from 5.85% to 5.938%.
At the secondary market on Monday before the auction, the 91-, 182- and 364-day T-bills were quoted at 5.5332%, 5.8988% and 5.9409%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
“Treasury bill average auction yields went up for the eighth straight week and still mostly unusually higher versus the comparable short-term PHP BVAL yields on a possible pickup in headline inflation due to the effects of the recent storms, weaker peso exchange rate, higher global crude oil prices, and possible protectionist policies by US President-elect [Donald J.] Trump that could lead to higher US inflation and fewer Federal Reserve rate cuts and also fewer local policy rate cuts,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message on Monday.
Inflationary pressures could cause the Philippine central bank to pause its easing cycle, but a slowdown in growth may leave room for another rate cut, Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. said last week.
Depending on the data, he said the Monetary Board may cut again or pause at its Dec. 19 meeting.
The BSP has delivered a total of 50 bps worth of rate cuts so far this year after it made 25-bp reductions at its August and October meetings.
Mr. Remolona said November inflation is likely to remain within the 2-4% target band, based on the BSP’s latest projections.
Headline inflation picked up to 2.3% in October, bringing the 10-month average to 3.3%, slightly above the BSP’s 3.1% baseline forecast for the year.
BSP Assistant Governor Zeno R. Abenoja also said that November inflation may reflect the typhoon damage in October, but the impact from the multiple storms that hit the country in November will likely be reflected in December inflation data.
Meanwhile, oil prices slipped on Monday following 6% gains last week, but supply worries amid mounting tensions between Western powers and major oil producers Russia and Iran kept a floor under prices, Reuters reported.
Brent crude futures fell 43 cents, or 0.57%, to $74.74 a barrel by 0705 GMT, while US West Texas Intermediate crude futures were at $70.73 a barrel, down 51 cents, or 0.73%. Both contracts last week notched their biggest weekly gains since late September to reach their highest settlement levels since Nov. 7 after Russia fired a hypersonic missile at Ukraine in a warning to the United States and Britain following strikes by Kyiv on Russia using US and British weapons.
Mr. Ricafort added that T-bill rates rose slightly as demand for this week’s offer was lower than the bids seen last week.
Monday’s T-bill auction was the last one for November. The Treasury raised P60 billion as planned via the short-term papers as it made full awards at its four auctions this month.
On Tuesday, the BTr will offer P15 billion in reissued five-year bonds with a remaining life of four years and five months.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — A.R.A. Inosante with Reuters