T-bill rates seen rising due to inflation

MANILA, Philippines — Yields of Treasury bills (T-bills) on offer this week may rise further on heightened concern due to rising inflation and weaker demand.

The Bureau of the Treasury (BTr) is raising P20 billion today from offers of the short-dated government debt papers: P5 billion each from the 91-day and P182-day tenors, and P10 billion for the 364-day tenor.

Bond traders said rates on the short-term debt papers can move sideways or rise further by five up to 10 basis points.

“What we are seeing is yields may be sideways to upward. The market is still concerned with rising inflation,” a bond trader said.

Inflation quickened to a fresh two-year high of 4.7 percent in February as prices of meat continued to rise and oil prices normalize coming from last year’s lows.

Consumer prices rose at a faster clip for the fifth straight month and was the fastest increase since the 5.1 percent growth in December 2018.

Another trader said demand may also be affected by the upcoming settlement date of the three-year retail Treasury bond (RTB).

The market may also be preparing for the issuance of the seven-year bond issuance this month.

“The market is also preparing for the seven-year bond and the settlement of the RTB,” said the trader.

While demand may weaken compared to the previous auctions, traders said there would still be “ample” appetite for the short-dated securities with the original offer expected to still be oversubscribed two times over.