THE Bureau of the Treasury fully awarded P15 billion in Treasury Bills (T-bills) on Monday despite the rise in rates that was triggered by concerns June’s inflation in June will breach government’s target.
All tenors fetched higher average rates compared with the rates in the previous auction but still lower than the secondary market rates.
The auction was thrice oversubscribed as total submitted bids hit P49.3 billion.
National Treasurer Rosalia V. De Leon attributed the rise in rates to “better PMI [Purchasing Managers’ Index] reading for June; yet still lingering concerns on Delta variant and inflation still above target.”
The Philippine manufacturing sector climbed back to growth territory in June, after travel restrictions were eased to support the local economy. In its latest report on the Philippine PMI, global think tank IHS Markit Ltd. said the country posted a PMI of 50.8 in June, up from the 49.9 reading in May.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno also expects inflation to likely hit 4.3 percent in June, still above the ceiling of the annual government target range of 2 percent to 4 percent.
Diokno said higher prices of domestic petroleum products along with the upward adjustment in electricity rates and a slightly weaker peso continue to put upward pressure on the price basket during the month. However, these could be partially offset by the decline in prices of key food items such as rice, meat and fruits due to improved supply conditions.
Meanwhile, the Philippines has so far detected 17 cases of the more transmissible Delta variant from incoming international travelers. The Department of Health, however, said there is still no local case of the said variant.
During the auction, the 91-day T-bills’ average rate stood at 1.044 percent, rising by 1.3 basis points from 1.031 percent in the previous auction. The debt paper attracted tenders amounting to P16.55 billion, more than thrice the P5-billion offer.
The 182-day debt paper’s average rate rose to 1.351 percent, climbing by 1.9 basis points from 1.332 percent previously. Bids submitted for the security hit P16.11 billion, also more than triple the P5-billion offer.
For the 364-day T-bills, the average rate went up by 0.6 basis points to 1.568 percent from 1.562 percent in the last auction. Tenders for the tenor reached P16.66 billion, equivalent to more than three times the P5-billion program.
For July, the Treasury has set to borrow P235 billion from the local debt market, slightly bigger than the P215 billion it programmed in June.