T-bill rates rise further as BSP hikes inflation forecast for 2022
The Ayuntamiento de Manila which houses the Bureau of the Treasury (From the Facebook account of the bureau)
MANILA, Philippines—T-bills rates further climbed across-the-board on Monday (Feb. 21) after the central bank raised its inflation forecast for this year while the Russian threat to invade Ukraine continued.
The Bureau of the Treasury awarded all P15 billion in short-dated IOUs — P5 billion each across the three tenors — despite higher bids from government securities eligible dealers (GSEDs).
Tenders totaled P35.9 billion or over two times bigger than the offering.
The benchmark 91-day debt paper fetched an average rate of 0.899 percent, up from 0.81 percent last week.
The 182-day was awarded at 1.157 percent, rising from 1.066 percent previously while 364-day treasury bills saw their annual rate jump to 1.568 percent from 1.475 percent.
De Leon attributed the increase in bid rates to the Bangko Sentral ng Pilipinas’ (BSP) upward adjustment of its 2022 inflation forecast to 3.7 percent from 3.4 percent previously.
Monetary authorities last week pointed to skyrocketing global oil prices plus possibly more expensive food as inflation threats even as headline inflation would likely remain within the BSP’s 2 to 4 percent target range of manageable price hikes conducive to economic growth.
Outside the Philippines, increasing tensions in Ukraine as US intelligence reports pointed to a pending invasion by Russia made local creditors jittery, De Leon said.
As the Treasury prepares for its domestic borrowings for March, De Leon said it “will have to calibrate [next month’s] issuance program, including size and tenors, with RTB [retail treasury bond] results and appetite of market following the revision in inflation forecast, Fed rate action, and developments in Ukraine.”
The ongoing offer of five-year RTBs — the Philippine government’s 27th overall and the Duterte administration’s 10th (and possibly its last before President Duterte steps down in mid-2022) — had a “good reception” so far, De Leon said.
The RTB offering, at a coupon rate of 4.875 percent per annum, will end on Feb. 28.
At last week’s rate-setting auction, the Treasury awarded an initial P120.8 billion in new RTBs on top of the swap for two bond series maturing this year.
