Inflation forecast feeds T-bill rate consolidation


THE Bureau of the Treasury (BTr) fully awarded P15 billion in Treasury Bills (T-Bills) as rates appear to be consolidating after the Bangko Sentral ng Pilipinas (BSP) hiked its inflation forecast this year to 4.1 percent.

The auction was more than thrice oversubscribed as total bids reached P53.3 billion.

The T-bill average rates also moved sideways, the with 91-day securities fetching a slightly higher rate and the 364-day T-bills settling at a lower rate.

The average rate for the 182-day T-bills was left unchanged.

Average rates across all tenors were all lower than the secondary market trading levels.

“Rates [settled] around these levels following inflation forecast [that] remains around [the] 4-percent to [the] 4.1=percent area,” National Treasurer Rosalia V. De Leon said. “This is also supported by strong liquidity.”

On Thursday, the BSP revised upward its inflation outlook for this year to 4.1 percent from 4 percent with hikes in global commodity prices, a weaker peso and delayed arrival of pork imports.

De Leon said they also rejected non-competitive bids for the 182-day tenor; sticking to awarding its P5-billion offering.

The 91-day T-bills’ rate averaged at 1.066 percent, inching up by 0.2 basis points from the previous auction’s 1.064 percent. The tenor attracted total bids amounting to P17.47 billion, more than thrice the P5-billion offer.

For the 182-day T-bills, the average rate remained at 1.407 percent. Bids for the security hit P18.48 billion, triple the P5-billion offer.

In terms of the 364-day T-bills, the average rate fell to 1.617 percent, dropping by 0.8 basis points from 1.625 percent. Tenders for the debt paper reached P17.325 billion, also thrice the P5 billion offer.

For August, the Treasury has set to borrow P200 billion from the local debt market, slightly lower than the P235 billion it programmed in July.

This year, the national government programmed to borrow a total of P3.1-trillion, of which around 75 percent is expected to be raised through domestic sources.

The outstanding debt of the national government has already piled up to P11.166 trillion as of end-June this year, swelling by 23.3 percent from P9.054 trillion a year ago.

Finance officials expect the national government’s debt-to-GDP (gross domestic product) ratio this year to hit 59.1 percent—last year it was at 54.6 percent. It is also expected to peak next year at 60.8 percent, which is slightly above the internationally-accepted threshold.

A new set of officials could expect a debt-to-GDP ratio of 60.7 percent in 2023 and 59.7 percent in 2024.

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