T-bill rates continue to rise
The Bureau of the Treasury on Monday sold P20 billion in bills at rates that rose across the board as a result of the 26-month high inflation and ongoing sell-off due to higher US treasury yields.
The Treasury fully awarded all of the short-dated debt paper it offered even as it was the third straight week of rising domestic rates.
The P5 billion in 91-day bills fetched an average rate of 1.139 percent, up from 1.04 percent last week.
Another P5 billion in 182-day IOUs were sold at 1.316 percent, up from 1.226 percent previously.
As for the P10 billion in 364-day securities, the annual rate increased to 1.852 percent from 1.68 percent.
Demand remained strong as investors tendered a total of P44 billion across the three tenors, making the auction twice oversubscribed.
National Treasurer Rosalia de Leon said the market had a “hangover from elevated inflation, with rates moving alongside the uptrend of US treasuries.”
Last week, the government reported that headline inflation jumped to 4.7 percent year-on-year in February—the highest rate of increase in prices of basic commodities since December 2018, no thanks to more expensive food such as pork as well as rising oil prices.
The Bangko Sentral ng Pilipinas expects high inflation to persist until the third quarter and average 4 percent—the target range’s top end—for the entire 2021.
In a note to clients Monday, Metrobank Research said that they expected the market to remain cautious especially if the sell-off in US treasuries would be extended.
“Yields in the near term may continue drifting higher given the additional supply and the lack of catalysts that will bring levels lower,” Metrobank said, referring to the total domestic borrowings programmed at P160 billion this month, which will replace about P193 billion in maturing securities.
