Gov’t makes full award of T-bonds at higher yields

THE GOVERNMENT made a full award of the reissued Treasury bonds (T-bonds) it offered on Tuesday, even as rates rose amid market expectations of quicker March inflation.

The Bureau of the Treasury (BTr) raised P30 billion as planned via the reissued seven-year bonds it offered on Tuesday as total bids reached P40.247 billion, above the amount on the auction block.

The bonds, which have a remaining life of six years and nine months, were awarded at an average rate of 6.299%, with accepted yields ranging from 6.2% to 6.35%.

The average rate of the reissued bonds went up by 2.9 basis points (bps) from the 6.27% quoted for the papers when they were last offered on March 5 and 17.4 bps above the 6.125% coupon for the issue.

This was also 7.9 bps higher than the 6.22% seen for the same bond series and 6 bps above the 6.239% quoted for the seven-year tenor at the secondary market on Tuesday before the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The average rate of the T-bonds rose amid expectations that headline inflation accelerated further last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The higher awarded T-bond rates today reflected market anticipations of an uptick in domestic headline inflation for March,” a trader likewise said in an e-mail on Tuesday.

Headline inflation likely picked up in March amid higher food, utility, and fuel prices, analysts said.

A BusinessWorld poll of 17 analysts conducted last week yielded a median estimate of 3.8% for March headline inflation.

If realized, this would be faster than the 3.4% print in February, but slower than the 7.6% rate recorded in the same month a year ago.

The consumer price index (CPI) would also be within the Bangko Sentral ng Pilipinas’ (BSP) 3.4%-4.3% estimate for the month.

This would mark the second straight month that inflation picked up on a monthly basis and the fourth straight month that the CPI was within the BSP’s 2-4% annual target.

The government will release March CPI data on Friday.

The BTr is looking to raise P195 billion from the domestic market this month, or P75 billion from Treasury bills and P120 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year. — A.M.C. Sy