BETTING that April inflation figures would swing higher, investors swamped to Monday’s auction of Treasury bills (T-bills) by the Bureau of the Treasury (BTr), evidenced by total bids for the P25 billion on offer to hit P94 billion.
The demand prompted the BTr to upsize the volume of T-bills it awarded to P28.2 billion from the initial offering as rates across all tenors dropped.
Investors on Monday trooped to the auction that witnessed total bids four times oversubscribed.
The auction saw average rates drop to levels lower than the previous auction and at secondary market trading.
National Treasurer Rosalia V. De Leon expressed satisfaction over the primary auction results, adding that they even opened the tap facility auction for an additional P7 billion offering for 364-day T-bills.
De Leon explained that the auction committee decided to double the accepted non-competitive bids for the 182-day T-bills.
“[I] welcome strong participation in today’s auction with rates declining across tenors in spite of projected elevated inflation last month,” she said.
Sought why investors shunned expectations of higher April inflation and bid huge, De Leon said it “seems the market is expecting a policy rate cut.”
She may be referring to the view of Central Bank Governor Benjamin E. Diokno who said last Friday that the country’s inflation rate in April is still likely above the government’s annual target range of 2 percent to 4 percent for the year.
Diokno said the country’s inflation likely settled between 4.2 percent and 5 percent in April this year based on monetary authorities’ forecasting models.
Monetary authorities are scheduled to hold its next policy meeting on May 13; its third for the year.
Monday’s auction saw the average rate of 91-day T-bills fall to 1.306 percent, lower by 6.3 basis points from 1.369 percent in the previous auction. The security attracted total bids amounting to P18.1 billion, more than thrice the P5-billion offering.
The 182-day T-bills settled at an average rate of 1.629 percent, sliding by 8.5 basis points from the prior auction’s 1.714 percent. Tenders for the tenor hit P38.08 billion, nearly five times the initial P8 billion offering.
For the 364-day T-bills, its average rate slipped to 1.863 percent, slightly lower by 1.7 basis point from 1.88 percent previously. Total bids for the tenor amounted to P37.865 billion, more than triple the P12-billion offering.
The national government’s outstanding debt has reached a new record-high of P10.77 trillion as of end-March this year, up by 27.1 percent from P8.48 trillion a year ago, according to the latest data released by the BTr last May 3.
The country aims to borrow a total of P3.03 trillion this year, roughly the same amount it borrowed in 2020.
Finance officials expect the national government’s debt this year to reach 57 percent of GDP.
As of end-2020, the country’s debt to GDP ratio surged to 54.5 percent—a 14-year-high—coming from a record-low 39.6 percent in the previous year.