BTR partially awards bids for 364-day T-bills

THE Bureau of the Treasury raised P12.6 billion out of its P15 billion offering of Treasury Bills (T-bills) as investors stubbornly stuck with higher bids in anticipation of policy changes by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve.

Monday’s auction ended up with mixed results as the auction committee decided to fully award P5-billion worth of bids each for the 91-day and 182-day T-bills and to partially award P2.6 billion out of its P5 billion offering for the 364-day T-bills.

Rates for the 91-day and 182-day securities were higher than the secondary market benchmark rates and the previous auction results.

Meanwhile, the 364-day T-bills fetched an average rate above the secondary market benchmark rate.

National Treasurer Rosalia V. De Leon explained that bids were higher as the market is “immersed in both Fed and BSP aggressive tightening rhetoric.”

De Leon further said that US Fed Chair Jerome Powell is “open to frontloading rate hikes combined with balance sheet runoff to cool down overheating prices.”

“Onshore, inflation for April likewise seen to settle higher at 4.6 percent,” she added.

Inflation for April is seen by the BSP to settle between 4.2 percent and 5 percent on the back of higher electricity rates, increased domestic petroleum prices and higher meat and fish prices. This is higher than the government’s inflation target band of 2 percent to 4 percent.

In March, inflation averaged 4 percent, higher than the 3 percent posted in February but slower than the 4.1 percent in March 2021. For the first quarter this year, inflation averaged 3.4 percent.

Last week, BSP Governor Benjamin E. Diokno told Bloomberg TV that they may consider raising key interest rates in June.

The BSP has kept interest rates at a record-low of 2 percent since November 2020. Diokno has said last year that “keeping a steady hand on the BSP’S policy levers amid a manageable inflation outlook should allow the economic recovery to gain more traction.”

Total bids for the tenors reached P23.7 billion, making the auction on Monday oversubscribed.

The 91-day T-bills average rate stood at 1.272 percent, jumping by 13.2 basis points from previous auction’s 1.14 percent. It is also 2.2 basis points higher than the Bloomberg Valuation Service (BVAL) Reference Rate of 1.25 percent.

For the 182-day tenor, the security capped at an average rate of 1.635 percent, up by 7.7 basis points from 1.558 percent previously. It is also above by 7.5 basis points from the BVAL rate of 1.56 percent.

Meanwhile, the 364-day T-bills had an average rate of 1.933 percent; the same level as the secondary benchmark rate.

Had the Treasury fully awarded the 364-day T-bills, the average rate would have reached 2.325 percent, soaring by 42.4 basis points from 1.901 percent in the previous auction.

For this month, the Treasury is targeting to raise P200 billion from the domestic debt market.

Last month, it sold P164.4 billion in government securities out of its P200 billion programmed offering.

This year, the government is set to borrow a total of P2.2 trillion, of which around 75 percent is expected to come from domestic sources.

As of end-february this year, the national government’s outstanding debt rose to another record-high level of P12.09 trillion due to currency fluctuations and net financing from both domestic and foreign sources.