Government raises nearly half of ₧15-B T-bills offered

THE Bureau of the Treasury raised P7.1 billion out of the P15-billion Treasury Bills (T-bills) it offered last Monday as investors asked for higher yields.

Results were mixed as the auction committee decided to partially award bids for the 91-day and 182-day T-bills while rejecting bids for the 364-day debt papers.

The 91-day and 182-day tenors, which were partially awarded, capped at average rates of 2.318 percent and 3.485 percent, respectively.

Had the Treasury fully awarded the 91-day and 182-day debt papers, these would have fetched average yields of 2.397 percent and 3.66 percent, respectively. The tenors would have been higher than the benchmark secondary market rates of 2.383 percent for the 91-day T-bill and 3.33 percent for the 182-day securities.

Had the 364-day T-bills been fully awarded, it would have reached an average of 4.356 percent, way beyond the benchmark secondary market rate of 3.891 percent.

“Rates way above current levels,” National Treasurer Rosalia V. De Leon told reporters following the auction when sought for comment on why the Treasury settled for a partial award.

Nonetheless, the auction was oversubscribed with total bids amounting to P26.7 billion.

Wrestling with inflation

LAST week, the Treasury also rejected bids for all tenors of T-bills on offer as rates rose across the board after Federal Reserve Chair Jerome Powell signaled they would continue to be hawkish in battling US inflation.

Locally, inflation in July has hit 6.4 percent, the highest recorded since October 2018’s 6.9 percent. This brings the Philippines’s average inflation from January to July 2022 to 4.7 percent, beyond the government’s target range of 2 percent to 4 percent for the year.

The Bangko Sentral ng Pilipinas recently raised its main benchmark rates by another 50 basis points as it expects inflation rate to reach 5.4 percent for this year, higher than its previous forecast of 5 percent.

For this month, the Treasury is set to borrow P200 billion from the local debt market in September, of which P140 billion will be through Treasury Bonds and another P60 billion from T-bills.

This year, the government is set to borrow a total of P2.21 trillion, of which 75 percent will be sourced locally while the remaining 25 percent will come from foreign sources.

As of end-July this year, the national government’s outstanding debt has soared to a new record-high of P12.89 trillion, an increase of P96.09 billion or 0.8 percent during the first month of the Marcos administration from P12.79 trillion as of end-June.

The country’s debt-to-GDP ratio slightly eased to 62.1 percent in the second quarter of the year from 63.5 percent in the first quarter. However, this remained above the internationally-recommended 60-percent threshold for a healthy economy.