Philippine T-bill yields may hit three-year highs as inflation looms
Philippine Treasury bill rates could climb for an 11th straight auction this week, with the Bangko Sentral ng Pilipinas forecasting October inflation of between 7.1% and 8.1% ahead of Thursday's official release. The upper end of that range would be the fastest print since February 2023 and would keep consumer prices above the central bank's 3% target for an eighth consecutive month.
The Bureau of the Treasury will auction P55 billion in short-term paper on Tuesday: P10 billion in 35-day cash management bills, P20 billion in 91-day T-bills, P15 billion in 182-day securities and P10 billion in 364-day debt. On Wednesday it seeks P30 billion from a reissued 10-year bond with six years and nine months remaining. The auctions were pushed back from their usual schedule because of the All Souls' Day holiday on 2 November.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said short-term bill rates could reach three-year highs and the reissued bond could fetch its highest average rate in more than eight years. He pointed to Brent crude at six-month highs, which he said could add to inflationary pressure, alongside risks of a US-Iran military escalation after the US midterm elections on 3 November.
Secondary-market yields had already moved. The 35-, 91-, 182- and 364-day papers closed Friday at 5.4896%, 5.8137%, 6.3% and 6.5727%, up 11.93, 5.99, 15.05 and 13.86 basis points week on week, according to the PHP Bloomberg Valuation Service reference rates. The 10-year bond rose 7.97 basis points to 8.1337%.
Last week the Treasury raised P47.68 billion against a P55-billion plan even as tenders reached P83.84 billion, awarding only P11.88 billion of the P15 billion offered in six-month bills and P5.8 billion of the P10 billion in one-year paper. The government aims to borrow P283 billion domestically this month and caps its budget deficit at P1.659 trillion, or 5.4% of gross domestic product, for the year.
