MANILA — The rates of Philippine Treasury bills (T-bills) rose across-the-board Monday, with strong demand being behind the rise in longer tenors, which National Treasurer Rosalia De Leon attributed to expectations that domestic inflation will continue to decelerate.
Average interest rate of the benchmark 91-day paper rose to 5.411 percent from 5.323 percent during the auction on December 17, 2018.
The Bureau of the Treasury (BTr) made a partial award of PHP2.720 billion after investors submitted only PHP4.344-billion worth of bids, lower than the PHP6 billion offering.
Rate of the 182-day paper improved to 6.424 percent from 6.344 percent during the auction last December 10. Bids for this tenor, along with that of the one-year paper, were rejected during the auction last December 17.
This week, the 182-day T-bills were offered for PHP6 billion and tenders reached PHP9.166 billion. The auction committee made a full award.
The same situation was registered by the 364-day paper, which fetched an average rate of 6.641 percent, higher than the 6.585 percent during the auction last December 10.
BTr offered the debt instrument for PHP8 billion and attracted PHP15.849 billion.
De Leon dubbed the year’s first T-bill auction as “good”, noting that investors now prefer longer tenor paper due to expectations “that inflation will continue to trend downwards.”
Quoting Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo, the National Treasurer said investors took note of the monetary official’s statement that rate of price increases is expected to return to between 2 to 4 percent level, the government’s target band for 2018-2020, by the second half this year.
In 2018, inflation averaged at 5.2 percent, higher than the government’s target range although it has decelerated to 6 percent and then 5.1 percent last November and December, respectively, after peaking at 6.7 percent in the previous two months.
The strong rise of inflation was traced to big upticks in the prices of global oil prices and supply issues on several food items, which, in turn, have been addressed through directives from Malacañang.
In September 2018, Malacañang issued several Memorandum Orders (MOs) directing the National Food Authority (NFA) to release its rice stocks nationwide to address lack of supply in the market, which pushed prices up and affected inflation.
Several agencies were also directed to help ensure the safe delivery of rice imports from ports to NFA warehouses and the markets.
Since the issuance of MOs, inflation of heavy-weighted food items has slowed down.
Aside from these local developments, de Leon said expectations that the Federal Reserve might pause on its tightening moves given the uncertainties on global economic outlook also boosted attractiveness of the BTr-issued T-bills.
“I think that also lifted the sentiment of the market to a risk-on appetite,” de Leon added.
