BTr partially awards T-bills as yields jump on inflation woes

THE GOVERNMENT partially awarded the Treasury bills (T-bills) it offered on Monday as yields jumped across the board on expectations of faster April inflation as the Middle East war continues to push up global energy costs.

The Bureau of the Treasury (BTr) raised P28.07 billion via the T-bills it auctioned off, below the P31-billion plan as total tenders reached P44.295 billion, lower than the P73.491 billion in demand recorded on April 27.

“Results were mixed in today’s Treasury bills auction, with the committee fully awarding bids for the 91-day T-bills, while partially awarding the 182- and 364-day securities,” it said in a statement.

Broken down, the Treasury raised P12 billion as planned via the 91-day T-bills as demand for the tenor reached P20.425 billion. The three-month paper fetched an average rate of 4.711%, climbing by 15.3 basis points (bps) from 4.558% last week. Bids accepted had yields ranging from 4.625% to 4.75%.

Meanwhile, the government borrowed just P9.68 billion via 182-day debt, below the P10-billion offering even as tenders reached P15.98 billion. The average rate of the six-month T-bill was at 4.964%, rising by 22.7 bps from 4.737% previously. Tenders awarded carried rates from 4.85% to 5.048%.

For the 364-day securities, the BTr sold only P6.39 billion, below the P9 billion on offer as bids totaled just P7.89 billion. The one-year paper fetched an average yield of 5.377%, increasing by 19.3 bps from 5.184% last week. Accepted bids had rates from 5.2% to 5.5%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.6217%, 4.7602%, and 5.2143%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

A trader said only the 91-day T-bills were fully awarded as yields rose week on week across all tenors.

“The T-bills fetched higher yields all around as players are likely anticipating the much higher consumer price index (CPI) data to be released tomorrow,” the trader said in a text message.

T-bill yields rose for the second straight week, reaching near one-month highs, as headline inflation likely accelerated further last month due to the effects of higher oil prices on the prices of other goods and services, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This, along with a weak peso that may push up import costs, could lead to more rate hikes from the Bangko Sentral ng Pilipinas (BSP), he added.

A BusinessWorld poll of 17 analysts yielded a median estimate of 5.5% for the April CPI.

If realized, this would be faster than the 4.1% in March and 1.4% in April 2025. It would also be the quickest in nearly three years or since the 6.1% in September 2023.

This would also mark the second straight month that inflation settled above the central bank’s 2%-4% target. However, this is below the BSP’s 5.6%-6.4% forecast for the month.

Higher fuel costs due to the ongoing war have threatened the inflation outlook, prompting the BSP’s Monetary Board to hike benchmark interest rates by 25 bps last month. This was the first increase in over two years.

BSP Governor Eli M. Remolona, Jr. also left the door open to further tightening via “a succession of modest rate hikes” as they try to quell spiraling prices.

The central bank now expects headline inflation to exceed its 2%-4% tolerance band until next year, raising its CPI forecasts to 6.3% for 2026 and 4.3% for 2027 from 5.1% and 3.8% previously.

On Tuesday, the government is targeting to raise up to P50 billion from a dual-tenor Treasury bond (T-bond) offering, or P20 billion to P30 billion from reissued seven-year T-bonds with a remaining life of three years and five months, and P10 billion to P20 billion through 20-year notes with a remaining life of 18 years and 21 days.

The Treasury wants to raise P268 billion from the domestic market this month, or P128 billion via T-bills and P140 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.61 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy