T-bills, T-bonds rates up after inflation uptick

April 9, 2024 | 12:00am

MANILA, Philippines — Yields for the government’s short and long-term securities picked up across the board after inflation accelerated for the second straight month.

The Bureau of the Treasury yesterday fully awarded short-term T-bills and partially accepted bids for long-term T-bonds as investors demanded rates that are beyond what the government can offer.

The Treasury conducted a double auction after the T-bond offering was moved a day earlier due to the two-day break.

The sale of government securities raised a total of P35.63 billion, almost 80 percent of the combined P45 billion target.

Interest rates for all tenors were up on a weekly basis as the market reacted from the 3.7 percent inflation print in March, marking the second straight month of increase for the prices of goods and services.

The latest inflation data further neared the four percent upper end of the target of the Bangko Sentral ng Pilipinas, leading to more hawkish signals from monetary authorities that policy rates could stay higher for longer.

During yesterday’s auction, rates across the board went up from the previous week’s auction, but were mixed in reference to the secondary market.

Still, all tenors were fully awarded at P5 billion each, marking the sixth straight T-bills auction that the Treasury raised its intended amount of P15 billion.

Rates for the 91-day T-bills picked up by 1.9 basis points to 5.772 percent from the reference rate and significantly rose from last week’s rate of 5.704 percent.

Similarly, the 182-day short-dated debt papers also saw rates increase by two basis points to 5.885 percent week-on-week, but slightly down by 0.9 basis points from the secondary market.

Likewise, rates averaged 5.983 percent for the 364-day T-bills, 1.8 basis points higher than last week, but 2.3 basis points down from the reference rate.

Overall demand for the short-term securities declined by 16 percent week-on-week. Total bids reached P39.939 billion, oversubscribing the auction by 2.66 times.

Bids also declined across the board to P10.333 billion, P15.036 billion and P14.57 billion for the 91, 182 and 364-day tenors.

Further, the Treasury partially awarded P20.625 billion out of the P30 billion offer for the reissued 10-year T-bonds with a remaining life of nine year and nine months, after it fetched an average yield of 6.439 percent, 10.8 basis points higher than the reference rate of 6.331 percent.

Rates went from a low of just 6.365 percent and a high of 6.48 percent.

Yesterday’s average rate was also higher than the 6.25 percent coupon rate when the T-bonds were first issued on Jan. 23.

The latest T-bonds yield was also higher than the 6.227 percent rate fetched during the last long-term government security auction for a 10-year bond on March 12. At the time, the government fully awarded P30 billion.

The auction was just 1.24 times oversubscribed as demand only reached P37.36 billion.

For this month, the Treasury aims to borrow P195 billion from domestic creditors.

Of this, P120 billion is expected to come from T-bonds and another P75 billion from short-dated T-bills. It has so far raised a combined P82.625 billion.