T-bill rates up as market awaits Nov inflation data

The government was unable to fully raise its planned amount of short-term borrowings during Monday’s auction of Treasury bills (T-bills), after what an analyst called a “slight correction” of rates that had fallen unusually low in the previous weeks as creditors await the new inflation data for November.The government borrowed P9.69 billion onshore via the sale of T-bills, below its goal to raise P10 billion from this week’s offer.

Total bids for the offer amounted to P34.73 billion, auction results showed. While the demand was 3.6 times bigger than the original size of the offer, it was smaller compared to the previous week’s order of P72.22 billion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said yields “corrected” after dropping “unusually” low in the last auction as investors wait for the release of November inflation data today.“The Treasury bill average auction yields corrected slightly higher week-on-week, after the previous week’s unusually significant declines, a day ahead of the latest headline inflation data that is expected to ease further,” Ricafort said.

The Bangko Sentral ng Pilipinas (BSP) forecasts inflation in November to have settled between 4 and 4.8 percent, which means there’s a potential that price growth finally returned to the central bank’s 2 to 4 percent target range last month.If realized, the BSP’s projection will also mark a further easing of inflation from the 4.9 percent recorded in October.

Still, BSP Governor Eli Remolona Jr. had telegraphed to the market that the central bank would “remain hawkish for a while” and stay ready to resume tightening—meaning hike rates—if necessary.

During Monday’s auction, average yield for the 91-day paper rose to 4.996 percent, from 4.753 in the previous week.

It also attracted the most tenders among the tenors, with orders reaching P15.51 billion.

The 182-day T-bill, meanwhile, fetched an average rate of 5.267 percent, higher than the 5.181 percent recorded in the last auction. INQ