THE GOVERNMENT partially awarded the Treasury bills (T-bills) it offered on Monday as yield movements were mixed, with demand shifting to the higher-yielding longer tenors on expectations of further monetary easing by the Bangko Sentral ng Pilipinas (BSP).
The Bureau of the Treasury (BTr) raised P24.46 billion from the T-bills it auctioned off on Monday, below the P25-billion plan, even as total bids reached P63.33 billion or more than twice the amount on offer. This was also higher than the P45.667 billion in tenders recorded on March 31.
Broken down, the Treasury borrowed just P7.46 billion via the 90-day T-bills, lower than the P8-billion program, even as tenders for the tenor reached P12.96 billion. The three-month paper was quoted at an average rate of 5.393%, rising by 8.6 basis points (bps) from the 5.307% seen at the previous auction. Tenders accepted by the BTr carried yields of 5.325% to 5.449%.
The BTr partially awarded the three-month paper to cap the rise in its average yield, rejecting bids with rates higher than those quoted for the longer tenors auctioned off on Monday, it said in a statement.
Meanwhile, the government made a full P8-billion award of the 181-day securities as bids for the paper amounted to P19.03 billion. The average rate of the six-month T-bill was at 5.645%, 0.8 bp lower than the 5.646% fetched last week, with accepted rates ranging from 5.545% to 5.747%.
Lastly, the Treasury raised P9 billion as planned via the 363-day debt papers as demand for the tenor totaled P31.34 billion. The average rate of the one-year debt went down by 2.2 bps to 5.726% from 5.748% previously, with bids accepted having yields of 5.71% to 5.745%.
The T-bill tenors were adjusted as the issue date was pushed back by a day due to a holiday.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.3454%, 5.6819%, and 5.7735%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
The government partially awarded its offer as three-month tenor’s average yield rose, a trader said in a text message.
“There is not much demand for the short end at the current levels as the market is anticipating rate cuts from the BSP. Investors are looking to lock in yields from longer tenors given this view,” the trader said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the six-month and one-year T-bills fetched slightly lower average yields as the market expects the BSP to resume its easing cycle this week and possibly implement more rate cuts within the year.
He added that the average T-bill yields fetched on Monday were mostly lower than comparable BVAL rates as well as the BSP’s current policy rate of 5.75%.
The BSP is expected to resume its easing cycle at its meeting on Thursday as easing inflation and a possible economic slowdown due to the United States’ trade policies give it ample room to cut borrowing rates further to support growth.
A BusinessWorld poll showed that all 17 analysts surveyed expect the Monetary Board to reduce its target reverse repurchase rate by 25 bps to 5.5% this week.
This would mark its first easing move since December as the BSP unexpectedly kept benchmark interest rates steady in February in a “prudent” move to assess the potential impact of the Trump administration’s evolving policies on the Philippine economy.
The Monetary Board has brought down borrowing costs by a cumulative 75 bps since it began its rate-cut cycle in August last year.
US President Donald J. Trump last week announced sweeping tariffs on America’s trading partners, imposing a 17% reciprocal tariff on all Philippine goods exported to the US, which will take effect on April 9.
While this was higher than the 10% baseline tariff imposed on most countries, this levy was the second lowest in Southeast Asia after Singapore (10%).
On Tuesday, the BTr will offer P35 billion in reissued 20-year Treasury bonds (T-bonds) with a remaining life of six years and three months.
The Treasury is looking to raise P245 billion from the domestic market this month or P125 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 P1.54 trillion this year. — A.M.C. Sy
