T-bill rates within stable range as BSP stance pacifies market

Rosalia de Leon

The Bureau of the Treasury on Monday raised P15 billion from T-bills, with rates moving sideways as the market took its cue from the central bank’s statement that the record-low 2-percent policy rate would stay untouched while economic recovery remained fragile.

The Treasury awarded P5 billion each in the benchmark 91-, 182- and 364-day securities. The yields for the three-month and one-year debt paper inched up to 1.113 percent and 1.604 percent, respectively, from 1.095 percent and 1.587 percent last week.

Six-month IOUs, meanwhile, saw bid rates slightly decline to an average of 1.39 from 1.391 percent previously.

National Treasurer Rosalia de Leon said yields moved sideways following Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno’s statement that an early rate hike could cause more harm to the economy.

In a series of tweets on Sunday, Diokno said he belonged to “team transitory” among “divided” central bankers and policymakers debating about the current high inflation environment, which some had warned could be a longer-term problem.

The globe is seeing faster price hikes as the world economy recovers. In the Philippines, headline inflation averaged an above-target 4.5 percent as of end-September due to expensive food, especially pork, fish and vegetables.

Diokno said while the latest BSP forecasts conceded that the rate of increase in prices of basic commodities would stay elevated at 4.5 percent by year-end, inflation would return to the manageable 2-4 percent target range, with projections of 3.3 percent next year and 3.2 percent in 2023.

“The major upside risk in the remaining months of 2021 is the potential impact of weather disturbances on the prices of key food items. Another upside risk to inflation is the rise in world commodity prices due to strong demand versus supply chain bottlenecks, as well as the possibility of a prolonged African swine fever outbreak in the country,” Diokno said.

“On the other hand, the main sources of downside risks are the prolonged impact of the domestic economic growth due to delays in the easing of lockdown measures and the weaker-than-expected global recovery owing to the rapid spread of the more infectious Delta variant,” he added.

Despite prevailing inflation jitters, demand for short-dated treasury bills remained strong as investors tendered a total of P36.1 billion across the three tenors, making the auction two times oversubscribed.

The Treasury also opened its tap facility window to sell another P3 billion of the 364-day T-bills to the 11 government securities eligible dealers-market makers to take advantage of the noncompetitive bids during the auction proper given the “good” annual rate, De Leon said. INQ