The Bureau of the Treasury on Monday sold all of the P15 billion in treasury bills it offered, on the back of “healthy” demand amid the government’s assurance that inflation has become stable these past two months.
The Treasury awarded P4 billion of the benchmark 91-day IOUs at an average rate of 4.979 percent, up from 4.952 percent last week.
It also accepted P5 billion for the 182-day debt paper at 6.159 percent, up from 6.059 percent during the previous auction.
For the 364-day treasury bills, P6 billion were awarded at an annual rate of 6.41 percent, down from 6.489 percent previously.
Tenders across the three tenors totaled P26.9 billion, of which half or P13.5 billion were for the one-year securities, making the auction oversubscribed.
National Treasurer Rosalia V. de Leon told reporters after the auction that “bids more or less have stabilized… coming from the statement that more or less inflation has stabilized last September.”
Some economists say that the headline inflation rate could have peaked in September and will go down towards yearend.
Investors were also more optimistic about prospects as the rice tariffication bill aimed at bringing down prices of the Filipino staple food moves in Congress, while the government would as well temporarily suspend the excise tax slapped on oil products scheduled next year, auguring well to contain inflation, de Leon added.
Based on Bangko Sentral ng Pilipinas and Department of Finance estimates, the temporary suspension of fuel excise taxes will reduce headline inflation by 0.2 percentage point or 0.3 percentage point, respectively.
De Leon also noted of BSP Governor Nestor A. Espenilla Jr.’s recent statement that a “modest” rate hike may be up and coming at next month’s Monetary Board meeting.
“This is the judgment area at the next policy meeting: Whether there’s need to do at least one more modest hike to seal the deal and firmly anchor inflation expectations,” Espenilla said in an Inquirer report Monday.
“We hope that this is it—that we will now see more or less the rates already stabilizing and hopefully try to go on a downward trajectory already in the coming auctions,” de Leon.
During the two-week roadshows in the US and Hong Kong to promote the upcoming global bond sale, de Leon said “investors continue to be impressed with the performance of the economy, but their complaint is that our spreads are very tight.”
“We are very expensive,” she added.