THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday at lower rates across all tenors as the Bangko Sentral ng Pilipinas’ (BSP) policy decision last week and dovish guidance bolstered demand for short-term securities.
The Bureau of the Treasury (BTr) raised P22 billion as planned from the T-bills it auctioned off as the offering was more than four times oversubscribed, with total bids reaching P97.185 billion, higher than the P74.514 billion in tenders recorded on Oct. 6.
The T-bills were fully awarded as the average rates fetched were all lower than those seen at the previous auction and prevailing secondary market yields, the Treasury said in a statement.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as total tenders for the tenor reached P25.21 billion. The three-month paper was quoted at an average rate of 4.88%, falling by 10.3 basis points (bps) from the 4.983% recorded in the previous auction. Yields accepted were from 4.87% to 4.893%.
The government also raised P7.5 billion as programmed from the 182-day securities as tenders amounted to P36.76 billion. The average rate of the six-month T-bill was at 5.072%, down by 5.6 bps from the 5.128% fetched last week, with accepted rates spanning from 5.05% to 5.093%.
Lastly, the Treasury sold the planned P7.5 billion in 364-day debt as demand for the tenor totaled P35.215 billion. The average rate of the one-year T-bill eased by 10.9 bps to 5.119% from 5.228% previously. Bids awarded carried yields from 5.099% to 5.13%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.9706%, 5.198%, and 5.2786%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
“The fall in yields can be tracked to the rate cut last week, as the decision also caused most benchmark bonds to go down significantly last Thursday and Friday,” a trader said in a text message.
“The increase in demand may also have been caused by renewed interest in trading due to the cut as the trade volume also increased significantly after the BSP’s decision.”
The government fully awarded its offer as T-bill yields eased and demand was supported by dovish signals from the central bank, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
He added that investors are locking in still-high yields amid expectations that rates will go down further in the coming months.
On Thursday, the Monetary Board delivered its fourth straight 25-bp cut to bring the target repurchase rate to 4.75%, the lowest since September 2022. Only six of the 16 analysts polled by BusinessWorld expected the reduction.
The central bank has now lowered benchmark borrowing costs by a cumulative 175 bps since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said they cut rates amid benign inflation and to help support growth as the widening corruption scandal involving state flood control and infrastructure projects has affected business sentiment and the outlook for the economy.
Mr. Remolona said another reduction is possible at their last meeting for the year scheduled for Dec. 11, with more cuts beyond that also on the table, as they are now looking at a neutral rate between 4% and 5%.
Analysts expect the BSP’s rate-cut round to continue until early next year, with most expecting a terminal rate of 4.25%.
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. — Aaron Michael C. Sy
