Inflation woes drive demand for short-term T-bills; auction partially awarded

The national government raised P10.55 billion out of the planned P15 billion from the offering of Treasury bills, again not borrowing the planned amount to avoid steep rates as the market anticipated rising inflation and further hikes in interest rates.

The auction committee led by the Bureau of the Treasury was able to award all P5 billion of the benchmark 91-day T-bills.

However, the committee again resorted to partial awards for the 182-day bills at P3.25 billion and 364-day bills at P2.3 billion.

With the latest results, interest rate for the three-month bills decreased by 8.9 basis points (bps) to an average of 4.375 percent from 4.464 percent previously.

On the other hand, the rate for the six-month bills went up by 8.3 bps to 4.921 percent from 4.838 percent, and for the yearlong bills by 4.2 bps to 5.142 percent from 5.1 percent.

Further, Monday’s results showed that prevailing rates at the secondary market were 25.4 bps lower for the 91-day bills at 4.121 percent, 11.1 bps lower for the 182-day bills at 4.81 percent and 8.8 bps lower for the 364-day bills at 5.054 percent.

Avoiding long-term tenor

For the three tenors, investors tendered a total of P29.452 billion, with the 364-day T-bills undersubscribed with only P4.971 billion submitted.

The three-month bills were oversubscribed by more than twice with P17.371 billion tendered as were the six-month bills with P7.11 billion tendered.

First Metro and UA&P said in their latest monthly report that stubbornly high inflation, rising policy rates and heightened fears of recession in advanced economies were shaping the behavior of the fixed-income market.

“Seemingly intractable inflation, rising policy rates and serious threat of a global recession have all conspired to scare the wits out of bond investors,” they said. INQ