THE GOVERNMENT partially awarded the Treasury bills (T-bills) it auctioned off on Monday as rates went up across the board after the central bank hiked borrowing costs anew last week.
The Bureau of the Treasury (BTr) raised just P13.05 billion from its offer of T-bills on Monday, below the P15-billion program, even as bids reached P30.328 billion or more than twice the amount on the auction block.
Broken down, the Treasury borrowed only P3.55 billion via the 91-day T-bills, below the P5-billion program, despite tenders reaching P7.33 billion. The average rate of the three-month papers rose by 18.3 basis points (bps) to 4.413% from the 4.23% quoted for the tenor last week, with accepted rates ranging from 4.325% to 4.5%.
The government also made a partial P4.5-billion award of the 182-day securities versus the P5-billion plan, even as demand for the tenor reached P10 billion. The six-month T-bill was quoted at an average rate of 5.06%, rising by 11.1 bps from 4.949% the previous week, with accepted rates ranging from 5.025% to 5.1%.
Meanwhile, the BTr raised P5 billion as planned from the 364-day debt papers as demand for the tenor reached P12.988 billion. The average rate of the one-year T-bill climbed by 15.70 bps to 5.455% from the 5.298% fetched for the tenor last week. Accepted yields were from 5.375% to 5.55%.
National Treasurer Rosalia V. de Leon said in a Viber message to reporters after the auction that the Treasury made a partial award of its T-bill offer as rates rose following the Bangko Sentral ng Pilipinas’ (BSP) policy decision last week.
“The committee decided to keep rates aligned with secondary market levels, thus the partial awards for the 91- and 182-day T-bills,” Ms. De Leon said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that auction yields posted a bigger increase week-on-week after the central bank’s rate hike and hawkish signals from the BSP chief.
A trader also said in a Viber message that the auction result was “expected due to the recent policy rate hike.”
The BSP last week hiked benchmark rates by 50 bps for a second straight meeting, and hinted at further tightening to help bring down elevated inflation.
The latest move brought the central bank’s policy rate to 6%, the highest in nearly 16 years or since May 2007 when it stood at 7.5%.
It has now raised borrowing costs by 400 bps since May 2022.
BSP Governor Felipe M. Medalla said after Thursday’s policy meeting that a third or fourth rate hike is likely this year, adding that they could look at a 25-bp or 50-bp increase at their March 23 review.
Mr. Ricafort added that rates also rose amid policy signals from US Federal Reserve officials, which fanned market expectations of two or three more rate hikes to bring down elevated US inflation.
Cleveland Fed President J. Loretta Mester and St. Louis Fed President James Bullard both said they would back a 50-bp hike in the next Federal Open Market Committee meeting following stronger-than-expected US consumer inflation in January.
The US consumer price index (CPI) increased 0.5% last month after gaining 0.1% in December. In the 12 months through January, the CPI increased 6.4% following a 6.5% rise in December.
The US central bank this month hiked its fed funds rate by 25 bps to a 4.5%-4.75% range, bringing cumulative increases since March 2022 to 450 bps. Its next policy meeting is on March 21-22.
On Tuesday, the BTr will offer P35 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and six months.
The Treasury wants to raise P130 billion from the domestic market this month, or P60 billion via T-bills and P70 billion via T-bonds.
The government borrows from domestic and external sources to finance its budget deficit, which is capped at P1.47 trillion this year or 6.1% of gross domestic product. — A.M.C. Sy
