T-bill rates may climb further on inflation pickup

RATES for the Treasury bills (T-bills) on offer this week could rise further on expectations that Philippine headline inflation picked up last month.

The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, or P5 billion each in 91-, 182-, and 364-day papers.

T-bill rates could track the week-on-week increase in secondary market yields amid an expected uptick in November inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Friday, the 91-, 182-, and 364-day T-bills went up by 11.13 basis points (bps), 2.48 bps, and 6.39 bps to end at 5.6445%, 5.9236%, and 6.0048%, respectively, based on the PHP Bloomberg Valuation Service Reference Rates data as of Nov. 29 published on the Philippine Dealing System’s website.

“The Bangko Sentral ng Pilipinas (BSP) released its November inflation forecast at 2.2-3%, which is mostly an uptick from last month’s 2.3% actual. Any surprise might cause some short-term volatility,” the trader said in an e-mail.

Headline inflation may have picked up in November as typhoon damage drove up prices of key agricultural commodities, analysts said.

A BusinessWorld poll of 15 analysts conducted last week yielded a median estimate of 2.5% for the November consumer price index (CPI), within the central bank’s 2.2%-3% forecast for the month.

If realized, the November print would be faster than 2.3% in October but slower than the 4.1% in the same month a year ago.

The Philippine Statistics Authority will release November CPI data on Dec. 5. (Thursday).

The Agriculture department last week said it downgraded its palay (unmilled rice) production forecast for this year due to several tropical cyclones that hit the country recently.

Its latest estimate is at 19.3 million metric tons (MMT), down from the 19.41 MMT forecast issued in October and the 20.1 MMT in August.

If realized, this would be a 3.63% decline from the 20.06 MMT palay output in 2023 and the lowest level since the 19.29 MMT posted in 2020.

Six consecutive typhoons hit the Philippines in recent weeks, damaging major rice, corn and vegetable production areas in eastern and northern Luzon. The Agriculture department estimated losses of about P10 billion from the recent storms.

Last week, the BTr raised P15 billion as planned from the T-bills it auctioned off as bids reached P47.155 billion, over thrice as much as the offered amount.

Broken down, the Treasury borrowed the programmed P5 billion via the 91-day T-bills as tenders for the tenor reached P17.25 billion. The average rate for the three-month paper went up by 1.6 bps to 5.647% from the previous week, with accepted rates ranging from 5.638% to 5.65%.

The government likewise made a full P5-billion award of the 182-day securities as bids hit P14.745 billion. The average rate of the six-month T-bill rose by 2 bps to 5.882%, with accepted bid yields at 5.862% to 5.914%.

Lastly, the BTr raised P5 billion as planned from the 364-day debt as demand for the tenor totaled P15.16 billion. The average rate of the one-year debt increased by 3.4 bps to 5.905%. Accepted rates were from 5.85% to 5.938%.

The Treasury plans to raise P75 billion from the local debt market this month, or P60 billion in T-bills and P15 billion in T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product this year. — A.M.C. Sy