BTR raises ₧13.95B as rates across all T-bill tenors rose

THE Bureau of the Treasury raised P13.95 billion on Monday as rates across all tenors rose after the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) tightened key policy in its meeting last week.

The auction committee decided to fully award its P5-billion offering for 91-day and 364-day Treasury bills (T-bills) and partially award P3.95 billion in 182-day T-bills.

National Treasurer Rosalia V. De Leon said investors continued to seek higher rates as both the BSP and the US Federal Reserve are expected to further raise interest rates.

According to De Leon, the climb in rates during Monday’s auction is considered an “aftermath” of the MB’S 25bps-rate lift “to cool down inflation.”

“Markets provided cushion as they see policy rates continue to be on a hiking cycle to let steam out of inflationary pressures,” the Treasurer added. “Both BSP and Fed are expected to unleash another 25bps [basis points] if not 50bps for BSP in August and a follow up 75bps for Fed.”

The auction also attracted P27.2 billion in total bids, making it oversubscribed.

Given the high interest rate environment, De Leon said that for the second half of the year they still expect “good demand” from investors even on debt papers with longer tenors as seen in last week’s auction of new 10-year Treasury Bonds.

“But of course, upward trajectory for rates induced expected rate increases to bring inflation back to target range,” she added.

Higher than BVAL’S

THE 91-day T-bills and the 364-day T-bills fetched average rates of 1.855 percent and 2.63 percent, respectively, while the 182-day security was capped at 2.4 percent.

These were all higher than the comparable Bloomberg Valuation Service Reference Rates at 1.626 percent, 1.935 percent, and 2.419 percent for the 91-day, 182-day and 364-day securities.

Last week, the BSP hiked the interest rate on its overnight reverse repurchase facility by 25 basis points to 2.5 percent. Accordingly, the interest rates on the overnight deposit and lending facilities were raised to 2 percent and 3 percent, respectively.

BSP Governor Benjamin E. Diokno said the Monetary Board mainly considered the rising inflationary pressures in tightening their monetary policy stance during the meeting last Thursday. (See https://businessmirror.com.ph/2022/06/23/ bsp-hikes-rates-anew-amid-rising-inflation/)

The BSP now expects inflation to average at 5 percent for this year, revised from its earlier forecast of 4.6 percent in May. The government originally targeted inflation this year to settle within 2 to 4 percent.

Borrowing tack

FOR this month, the Treasury is set to borrow P250 billion from the domestic debt market, of which P175 billion is expected to come from auctioning off Treasury Bonds and another P75 billion through it sale of T-bills.

Since the start of June, the Treasury has raised P151.34 billion out of its P215 billion offering.

As of end- April, the national government’s outstanding debt hit another record-high at P12.76 trillion, just two months before President Duterte steps down from office.

The national government’s debtto-gdp ratio as of the first quarter of the year rose to a 17-year-high at 63.5 percent, above the internationally recommended 60-percent threshold by multilateral lenders for emerging markets like the Philippines. It is also the highest since the country’s debtto-gdp ratio hit 65.7 percent in 2005 under the Arroyo administration.