THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday at lower yields amid robust demand after the Bangko Sentral ng Pilipinas (BSP) cut rates for a third straight meeting and signaled it is near the end of its current easing cycle.
The Bureau of the Treasury (BTr) raised P25 billion as planned from the T-bills it auctioned off as the offer was more than five times oversubscribed, with total bids reaching P125.504 billion. This was also higher than the P113.02 billion in tenders recorded on Aug. 18.
The Auction Committee fully awarded the T-bills as all tenors fetched average rates that were lower than those seen at the previous auction and prevailing secondary market yields, the BTr said in a statement.
Broken down, the Treasury borrowed P8.5 billion as planned via the 91-day T-bills as total tenders for the tenor reached P28.33 billion. The three-month paper was quoted at an average rate of 5.173%, down by 2.2 basis points (bps) from the 5.195% seen in the previous auction. Yields accepted ranged from 5.08% to 5.183%.
The government likewise raised P8.5 billion as programmed from the 182-day securities as tenders amounted to P47.774 billion. The average rate of the six-month T-bill was at 5.323%, falling by 7.5 bps from the 5.398% fetched last week, with accepted yields spanning from 5.288% to 5.35%.
Lastly, the Treasury sold the planned P8 billion in 364-day debt as demand for the tenor totaled P49.39 billion. The average rate of the one-year T-bill dropped by 6.5 bps to 5.457% from 5.522% previously. Tenders accepted carried rates from 5.45% to 5.46%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.2321%, 5.3921%, and 5.5357%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
T-bill rates were lower following the widely expected cut by the BSP last week, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“BSP Governor Remolona gave less dovish signals on a possible one 25-bp BSP rate cut for the rest of 2025 if economic data remained weak, or even no more rate cut for the rest of 2025 if the economic data remained the same,” Mr. Ricafort said.
“The continued decline in yields was due to the BSP’s rate cut decision last week, which signals the end of the current easing cycle,” a trader likewise said in a text message.
On Thursday, the Monetary Board delivered its third consecutive 25-bp reduction this year to bring the target reverse repurchase rate to 5%.
The BSP has now slashed benchmark borrowing costs by a total of 150 bps since the start of its rate-cut cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said after the meeting that the latest move puts the policy rate at a “sweet spot” in terms of both inflation and output.
Still, Mr. Remolona left the door open to one last reduction within this year to support the economy if needed, which could mark the end of their easing cycle.
The Monetary Board has two remaining meetings this year to be held in October and December.
T-bill rates declined across the board as demand was higher week on week, especially for the longer tenors, the trader added.
On Tuesday, the government will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of seven years and 13 days.
The BTr is looking to raise P220 billion from the domestic market this month, or P100 billion via T-bills and P120 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — AMCS
