Despite high rates, BTr fully awards Treasury bills

MANILA, Philippines  – Rates sought by creditors for short-term debt securities jumped for the 11th straight week as the market waits for the inflation data for February, but this did not stop the government from borrowing its target amount of Treasury bills (T-bills) on Monday.

Auction results showed the Bureau of the Treasury (BTr) raised its planned amount of P15 billion via sale of T-bills.

The offer was met with strong demand, attracting total bids amounting to P36.90 billion which was more than twice the original size of the issuance. But average yields for the T-bills still went up as investors wait for the February inflation number, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

“Treasury bill average auction yields were mostly slightly higher a day before the latest local inflation data that is expected to slightly pick up due to easing high base effects as well as higher rice prices locally and globally due to risk of El Niño drought,” Ricafort said.

Inflation

The Bangko Sentral ng Pilipinas (BSP) projected that the inflation rate in February settled between 2.8 and 3.6 percent. If the upper-end of the forecast range is realized, inflation in February would be faster than the 2.8 percent recorded in January.

READ: Pickup in Feb inflation seen, but still within target

The BTr said rates for the 91-day debt paper averaged 5.778 percent, higher than the 5.710 percent recorded in the previous week.

Meanwhile, creditors sought an average rate of 5.995 percent for the 182-day T-bill, more expensive than 5.971 percent in the last auction.

The 364-day tenor fetched an average yield of 6.100 percent, up from the previous offer’s 6.085 percent.
T-bill rates are used by banks and other financial institutions as a reference for their lending rates, such as for buying a new house or car.

Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. Of that amount, P51 billion will be raised via T-bills while P1.8 trillion will come from weekly auctions of Treasury bonds.

Those borrowings are needed to help plug a projected budget hole of P1.39 trillion this year, which is equivalent to 5.1 percent of GDP.