THE GOVERNMENT upsized its award of the Treasury bills (T-bills) it offered on Monday, with yields ending mostly slightly higher as Philippine headline inflation likely picked up last month.
The Bureau of the Treasury (BTr) raised P25 billion from the T-bills it auctioned off, above the P22-billion plan, as the offer was over four times oversubscribed, with total bids reaching P99.095 billion. This was also higher than the P85.365 billion in tenders recorded at last week’s auction.
The Auction Committee hiked its T-bill award as all tenors fetched average rates that were lower than those quoted at the secondary market, the BTr 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 P30.58 billion. The three-month paper was quoted at an average rate of 4.874%, up by 1.6 basis points (bps) from 4.858% in the previous auction. Yields accepted were from 4.848% to 4.887%.
The government also sold the programmed P7.5 billion in 182-day securities as tenders for the tenor totaled P37.255 billion. The average rate of the one-year T-bill inched down by 1.8 bps to 5.026% from 5.044% previously. Bids awarded carried yields from 5% to 5.049%.
Meanwhile, the Treasury upsized its award of 364-day debt to P10.5 billion from the P7.5-billion plan as the tenor drew demand amounting to P31.26 billion. This prompted the BTr to double its acceptance of noncompetitive bids for the tenor to P6 billion, it said.
The average rate of the one-year T-bill was at 5.099%, inching up by 0.6 bp from the 5.093% fetched last week. Accepted rates ranged from 5.085% to 5.113%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.8951%, 5.0966%, and 5.1781%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
The Treasury made a full award of its T-bill offer as yields mostly moved sideways and demand remained strong, a trader said in a text message.
“Higher demand is likely due to the preference for short-term tenors at the moment, while the lack of movement in yields reflects the general lack of activity in the market recently,” the trader said.
T-bill yields mostly edged up before the release of October consumer price index (CPI) data on Wednesday (Nov. 5), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“[The] latest inflation data is expected to be slightly higher versus the 1.7% in September 2025,” he said, adding that the peso’s recent weakness could lead to higher importation costs that could further drive up the CPI.
The peso logged a new record low of P59.13 against the dollar on Oct. 28.
A BusinessWorld poll of 17 analysts yielded a median estimate of 1.8% for October headline inflation.
If realized, this would have picked up from the 1.7% clip in September but slowed from the 2.3% seen in the same month last year. It would also be the fastest clip in eight months or since the 2.1% in February and would match the 1.8% in March.
Still, the median estimate falls within the Bangko Sentral ng Pilipinas’ (BSP) 1.4-2.2% forecast for October. It would also mark the eighth month in a row that inflation undershot the BSP’s 2-4% annual target.
T-bill rates also went up after US Federal Reserve Chair Jerome H. Powell signaled that a December rate cut could be unlikely, Mr. Ricafort added.
On Wednesday, after the Fed’s policy-setting committee voted 10-2 to lower its benchmark interest rate to the 3.75%-4% range, Mr. Powell delivered an unusually clear warning to markets: given “strongly differing views” about how to proceed in December, he said, a rate cut was “not a foregone conclusion, far from it,” Reuters reported.
Financial markets pared what had been near-certain pricing for a December rate cut after Mr. Powell’s remarks, although bets still reflect twice as high a chance of a rate cut as none.
On Tuesday, the government will offer P35 billion in a dual-tenor Treasury bond (T-bond) offering. Broken down, it wants to raise P20 billion via reissued seven-year papers with a remaining life of four years and eight months, and P15 billion in reissued 10-year securities with a remaining life of nine years and five months.
The BTr is looking to raise P158 billion from the domestic market this month, or P88 billion via T-bills and P70 billion through 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. — Aaron Michael C. Sy
