RATES for the Treasury bills (T-bills) to be auctioned off this week could continue to go down to track yield movements at the secondary market as players continue to monitor statements from officials of both the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve on their respective policy paths.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7.5 billion each in 89-day and 182-day securities, and P7 billion in 364-day papers.
The three-month tenor’s maturity was adjusted from the usual 91-day term due to holidays.
T-bill yields could track the slight week-on-week decline seen for comparable benchmarks at the secondary market due to bets on the next moves of the BSP and the Fed, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Last week, BSP Governor Eli M. Remolona, Jr. said they could lower benchmark rates further as early as next month if the economy shows signs of losing momentum.
The Monetary Board last month slashed borrowing costs by 25 bps for a third straight meeting to bring the policy rate to 5%. This brought cumulative cuts since August 2024 to 150 bps.
Mr. Remolona has described the policy setting as a “Goldilocks rate,” balancing inflation and growth.
“So, if the forecast stays… we’re going to stay where we are in terms of the policy rate. There may be small adjustments — a pause or an ease — but more or less, we’re going to be at the same range.”
He said 25-bp reductions at each of their October and December meetings are “possible but not likely.”
Meanwhile, the Fed this month lowered its target rate by 25 bps to the 4%-4.25% range, which was its first cut since December. This brought its total reductions since September 2024 to 125 bps. Its “dot plot” showed projections of two more rate cuts this year.
Mr. Powell said on Tuesday the central bank needed to continue balancing the competing risks of high inflation and a weakening job market in coming interest rate decisions, even as his colleagues staked out arguments on both sides of the policy divide, Reuters reported.
Market sentiment has also been affected by increased political noise due to the corruption allegations related to infrastructure projects, Mr. Ricafort added.
An ongoing Senate probe into anomalous flood control projects has led the National Bureau of Investigation to recommend the prosecution of several lawmakers and officials of the Department of Public Works and Highways.
At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills dropped by 1.04 basis points (bps), 3.41 bps, and 4.34 bps to end at 4.9354%, 5.1635%, and 5.2607%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Sept. 26 published on the Philippine Dealing System’s website.
“We expect trading to consolidate at these levels towards the quarter end before players begin to pick up again,” a trader said in an e-mail on Friday.
Last week, the government raised P25 billion as planned from the T-bills it auctioned off as the offering was nearly five times oversubscribed, with total bids reaching P117.84 billion.
Broken down, the Treasury borrowed the planned P8.5 billion via the 90-day T-bills as total tenders for the tenor reached P35.805 billion. The three-month paper was quoted at an average rate of 4.883%, down by 6.7 bps from the previous auction. Yields accepted were from 4.815% to 4.924%.
The government also raised P8.5 billion as programmed from the 182-day securities as tenders amounted to P41.35 billion. The average rate of the six-month T-bill was at 5.081%, easing by 6.7 bps from the previous week, with accepted rates spanning from 5.025% to 5.11%.
Lastly, the Treasury sold P8 billion as planned in 364-day debt as demand for the tenor totaled P40.685 billion. The average rate of the one-year T-bill dropped by 7.7 bps to 5.195%. Bids awarded carried yields from 5.145% to 5.244%.
The BTr is looking to raise P180 billion from the domestic market this month, or P110 billion via T-bills and P70 billion through Treasury 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. — A.M.C. Sy
