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Philippines: Demand for T-bills down anew
MANILA, Philippines — Demand for the government’s short-term securities declined for the sixth consecutive week amid signals of continued rate hikes from the Bangko Sentral ng Pilipinas (BSP) as inflation remains stubbornly high.
The Bureau of the Treasury yesterday made a partial award of P9.71 billion in T-bills, short of the P15 billion target.
This is the fourth week of partial award for T-bills, with the amount raised being reduced for the past month.
Likewise, overall demand for the short-term securities reached P20.129 billion, down 11 percent from last week’s P22.65 billion. The auction was oversubscribed by 1.34 times.
Such demand has already been on a continuing decline for six weeks now, coming from a high of P62.01 billion on Jan. 23.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the decline may have to do with the central bank’s signal of a 25- to as much as 50-basis-point hike in policy rate.
This comes as inflation is expected to remain elevated and may even surpass the fresh 14-year high of 8.7 percent in January.
The BSP said inflation could settle at 8.5 percent and may even hit a high of 9.3 percent amid upward pressures on liquefied petroleum gas prices and some food commodities.
The Philippine Statistics Authority will release inflation data today.
Ricafort said further declines in both demand and in the amount raised in T-bills could be expected in the coming weeks.
“This, as the markets await the peak in Fed rates and local policy rates by third quarter, as a function of US and local inflation easing further in the coming months as well as the behavior of the peso exchange rate,” Ricafort said.
“The recent RTB (retail T-bond) issuance and the weekly BSP TDF (term deposit facility) and 28-day securities auctions have also siphoned off some of the excess peso liquidity from the financial system as part of the efforts to help stabilize the peso and overall inflation,” he said.
During yesterday’s auction, rates for the 91-day T-bills went down by 3.1 basis points to 4.586 percent from the secondary rate of 4.617 percent and below last week’s 4.864 percent.
On the other hand, the 182-day short-dated debt papers saw rates soar by 20.2 basis points to 5.378 percent from the reference rate of 5.176 percent. This was higher as well from last auction’s 5.177 percent.
The Treasury just accepted P2.455 and P2.25 billion for the 91-day and 182-day, respectively.
For the 364-day T-bills, rates averaged 5.707 percent, up by 9.8 basis points. Yields rose in comparison with secondary markets and from last week’s auction.
Still, the Treasury awarded P5 billion for the one-year T-bills on offer.
Bids declined to P6.8 billion and P8.157 billion for six months and one year, respectively, but increased to P5.172 billion for the three-month tenor.
For March, the Treasury targets to borrow P200 billion from the local debt market. Of that, P75 billion is expected to be raised from short-term debt papers.
The Treasury has so far raised P19.71 billion.
Source: https://www.philstar.com/business/2023/03/07/2249756/demand-t-bills-down-anew