By Aaron Michael C. Sy, Reporter
THE BUREAU of the Treasury fully awarded Treasury bills at an auction on Monday as investors flocked to short-term debt amid expectations of further interest rate cuts from the Bangko Sentral ng Pilipinas (BSP) and US Federal Reserve.
It raised P22 billion as planned, with total bids hitting P95.17 billion — more than four times the offer volume but slightly below the P97.19 billion in tenders logged a week earlier.
The Treasury awarded P7 billion in 91-day securities as bids reached P26.68 billion. The average yield for the tenor inched up by 0.4 basis point (bp) to 4.884% from the previous auction, with accepted rates ranging from 4.82% to 4.93%.
It also raised P7.5 billion as programmed from the 182-day T-bills, which attracted P40.63 billion in bids. The six-month paper fetched an average rate of 5.058%, down by 1.4 bps from last week. Accepted yields were 5.01% to 5.088%.
The final P7.5 billion came from the 364-day tenor, which drew P27.86 billion in tenders. The one-year bill’s average yield declined by 2.2 bps to 5.097%, with accepted rates at 5.05% to 5.145%.
Before the auction, secondary market yields stood at 4.9708%, 5.1380%, and 5.2031% for the 91-, 182- and 364-day securities, based on Bloomberg Valuation Service reference rates.
“Lack of yield movement is likely due to the absence of catalysts before the auction and subdued market activity,” a trader said in a text message.
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said the slight easing in yields reflected dovish signals from both the BSP and Fed.
BSP Governor Eli M. Remolona, Jr. earlier said the central bank’s “sweet spot” for the policy rate could be closer to 4%, hinting at more cuts this year and in 2026. The Monetary Board earlier this month trimmed benchmark rates by 25 bps for a fourth straight meeting, bringing the key rate to 4.75%, the lowest since September 2022.
The BSP has lowered borrowing costs by 175 bps since beginning its easing cycle in August 2024.
The Fed is scheduled to meet on Oct. 28–29 and is widely expected to deliver a second straight 25-basis-point cut. Fed Chairman Jerome H. Powell said a reduction remains possible as inflation and labor market trends remain steady.
On Tuesday, the Treasury will auction P35 billion in reissued Treasury bonds — P20 billion in 20-year debt with about seven years left to maturity and P15 billion in 25-year bonds with 24 years and three months remaining.
The BTr aims to raise P180 billion from the domestic market this month, consisting of P110 billion in T-bills and P70 billion in T-bonds.
The government borrows from local and foreign sources to finance its budget deficit, capped at P1.56-trillion or 5.5% of gross domestic product this year.
