Treasury: Domestic creditors unbothered by poll uncertainty

MANILA, Philippines—Local creditors snapped up the T-bills offered by the Bureau of the Treasury (BTr) on Monday (May 2), although high domestic inflation and a hawkish US Federal Reserve tempered bids for the longest tenor.

Even as the national elections—to decide who will replace President Rodrigo Duterte—were just a week away, National Treasurer Rosalia de Leon said the BTr did not see a jittery domestic debt market.

The BTr fully awarded P5 billion each in the benchmark 91- and 182-day treasury bills.
The shortest three-month debt paper fetched an average rate of 1.272 percent, up from 1.14 percent last week.

Six-month IOUs also had a higher yield of 1.635 percent than 1.558 percent previously.

But the BTr capped the tenders it accepted for 364-day securities at an annual rate of 1.933 percent, hence borrowed only P2.6 billion or a little over half of the offering. Last week, one-year T-bills were fully awarded at 1.901 percent.

“Bids were higher as the market was immersed in both the Fed and the Bangko Sentral ng Pilipinas’ (BSP) aggressive tightening rhetoric,” De Leon said. BSP Governor Benjamin Diokno, for instance, recently hinted at forthcoming interest rate increases from the current record-low 2-percent policy rate, which helped keep the economy afloat amid the prolonged COVID-19 pandemic.

“Onshore, inflation for April was likewise seen to settle higher,” De Leon added. The April headline inflation forecasts of 22 economists and financial institutions collected by the Inquirer last week were all above the BSP’s 2-4 percent target band amid expensive oil and food.

As for the US Fed, De Leon noted that its chair Jerome Powell was “open to front-loading rate hikes combined with balance sheet runoff to cool down overheating prices” as US inflation hit 40-year highs.

In all, the BTr raised P12.6 billion out of its P15-billion total T-bills offering. Government securities eligible dealers (GSEDs) tendered a total of P23.7 billion across the three tenors, making the auction 1.5 times oversubscribed.

TSB