The government fully awarded the Treasury bills (T-bills) it offered on Monday, as average yields dropped across all tenors, with investors betting on slower June headline inflation.
The Bureau of the Treasury raised P60 billion as planned from the T-bills it auctioned off, with total tenders reaching P136.841 billion, more than twice the amount on offer. This was higher than the P122.608 billion in demand seen for the same offer volume last week.
The Treasury borrowed P20 billion via the 91-day T-bills, with demand reaching P57.909 billion. The three-month paper fetched an average rate of 5.143%, declining by 10.2 basis points from 5.245% last week. Bids accepted had yields from 5.075% to 5.165%.
For the 182-day debt, the government raised P20 billion, with tenders reaching P40.337 billion. The average yield on the six-month T-bill was at 5.729%, down by 3.5 basis points from 5.764% previously. Tenders awarded carried rates from 5.65% to 5.758%.
The government also sold P20 billion in 364-day securities, with bids for the tenor totaling P38.595 billion. The one-year paper fetched an average rate of 5.964%, edging down by 0.4 basis points from 5.968% last week. Accepted bid yields were from 5.9% to 5.98%.
A trader noted that the decline in the 91-day yield suggests the market is pricing less near-term upside in short-term rates following the June rate hike by the central bank. The trader added that the large volume of T-bills programmed to be issued this quarter could limit the extent of further yield declines in coming auctions.
The Philippine Statistics Authority is set to release June inflation data on Tuesday, which is expected to show a slowdown in headline inflation. A BusinessWorld poll of 18 analysts yielded a median estimate of 6.6% for the June Consumer Price Index, slower than the 6.8% in May but faster than 1.4% a year ago.
The central bank raised benchmark interest rates by 25 basis points for a second straight meeting, bringing the policy rate to 4.75%. The Monetary Board has now hiked benchmark borrowing costs by a total of 50 basis points this year, as the global oil price shock caused domestic consumer prices to spike.
The government is targeting to raise P410 billion from the domestic market this month, through T-bills and T-bonds. The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year.
