RATES of the Treasury bills (T-bills) on offer on Monday could end mostly lower on bets of further monetary easing by the Bangko Sentral ng Pilipinas (BSP), while the five-year retail Treasury bonds (RTBs) could fetch yields close to comparable secondary market levels at the rate-setting auction.
The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday, or P7 billion in 91-day securities, P8.5 billion in 182-day debt, and P9.5 billion in 364-day papers.
On Tuesday, the government will hold the rate-setting auction for its offering of five-year RTBs, from which it targets to raise at least P30 billion. The BTr cancelled its scheduled auction of P30 billion in five-year Treasury bonds (T-bonds) on Aug. 5 to give way to the RTB offer.
“The upcoming Treasury bill average auction yields could again slightly ease after the comparable short-term PHP BVAL (Bloomberg Valuation Service) yields were mostly slightly lower, particularly the six-month and one-year tenors,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“Upcoming local inflation data expected to be benign… could still support the dovish signals recently by local monetary authorities on possible 50-basis-point (bp) rate cuts for the rest of 2025, the earliest of which would be a possible 25-bp rate cut as early as the next rate-setting meeting on Aug. 28,” Mr. Ricafort said.
At the secondary market on Friday, the rate of the 91-day T-bill inched up by 0.48 bp week on week to end at 5.4152%, based on PHP BVAL Reference Rates data as of Aug. 1 published on the Philippine Dealing System’s website. Meanwhile, the 182- and 364-day papers went down by 2.47 bps and 1.72 bps to fetch 5.557% and 5.6628%, respectively.
Meanwhile, a BusinessWorld poll of 17 analysts yielded a median estimate of 1.2% for the July consumer price index, within the central bank’s 0.5%-to-1.3% forecast for the month.
If realized, the July print would be slower than the 1.4% in June and 4.4% clip in the same month a year ago.
BSP Governor Eli M. Remolona, Jr. said on Wednesday that a rate cut is “on the table” at the Monetary Board’s Aug. 28 review. If realized, this would mark the BSP’s third straight easing move since April.
The BSP has lowered borrowing costs twice this year, with cumulative cuts since it began its easing cycle in August 2024 now at 125 bps.
Mr. Remolona also said he is keeping his outlook for two more rate cuts this year. After this month’s review, the Monetary Board has two remaining meetings scheduled in October and December.
On the other hand, the five-year RTBs could fetch yields at par with comparable secondary market rates, Mr. Ricafort said. At the secondary market on Friday, the five-year bond rose by 0.49 bp week on week to end at 5.9734%, based on PHP BVAL Reference Rates data.
“The upcoming RTBs could add to the supply of bonds in the market and siphon off excess peso liquidity,” he said.
“The expected coupon rate is 6%. Eligible bonds for exchange amount to P566 billion, which could relieve liquidity pressure,” a trader added in an e-mail.
The public offer period for the RTBs will run from Aug. 5 to Aug. 15, unless ended earlier by the Treasury.
For the first time, the retail bonds will be available on an e-wallet, as they will be sold on GCash’s GBonds platform.
As part of the retail bond offer, the BTr is also conducting a bond exchange program for holders of eligible three-, seven- and 10-year T-bonds set to mature from September this year to February next year.
Last week, the Treasury raised P28.4 billion from the T-bills it auctioned off, higher than the P25-billion plan, with the offer more than four times oversubscribed as total bids reached P103.45 billion.
Broken down, the BTr borrowed P7 billion as planned via the 91-day T-bills as total tenders for the tenor reached P37.74 billion. The three-month paper was quoted at an average rate of 5.388%, down by 3.4 bps from the rate seen at the previous auction. The BTr only accepted bids with this yield.
Meanwhile, the government raised P11.9 billion from the 182-day securities, higher than the P8.5-billion program, as bids amounted to P36.74 billion. The average rate of the six-month T-bill was at 5.543%, down by 2.3 bps from the previous week, with accepted yields ranging from 5.54% to 5.55%.
Lastly, the Treasury sold the programmed P9.5 billion in 364-day debt as demand for the tenor totaled P28.97 billion. The average rate of the one-year T-bill inched down by 0.4 bp to 5.627%. Tenders accepted carried rates ranging from 5.6% to 5.648%.
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
