Strong demand for T-bills seen in 1st quarter

The Bureau of the Treasury expects strong demand for government securities, especially short-dated bills, this year on expectations that inflation will continue to taper off.

National Treasurer Rosalia V. de Leon said in a text message last Friday that the Treasury would sell a bigger volume of bills in the first quarter “since inflation will be lower but remains elevated against target” between January and March.

Every Monday for 12 weeks beginning Jan. 7, the Treasury will issue P20 billion in bills—P6 billion in 91-day, P6 billion in 182-day and P8 billion in 364-day IOUs.

In all, the Treasury plans to auction P240 billion in bills on top of P120 billion in bonds during the first three months, or a total of P360 billion in debt paper.

During the fourth quarter of last year, the Treasury sold just P15 billion in bills weekly.

Some economists had projected headline inflation returning to within the government’s target range of 2-4 percent as early as the second quarter of 2019.

Last year, the rate of increase in basic commodities hit more than nine-year highs and breached the target band partly due to higher excise taxes implemented under the Tax Reform for Acceleration and Inclusion Act, domestic food supply bottlenecks as well as skyrocketing global oil prices.

In response to high inflation, the Monetary Board of the Bangko Sentral ng Pilipinas last year raised its key interest rate by a total of 175 basis points to 4.75 percent, making it more expensive to borrow money.