THE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday as rates dropped across the board, backed by strong market appetite for debt papers and expectations of further policy easing by the Bangko Sentral ng Pilipinas (BSP).
The Bureau of the Treasury (BTr) raised P22 billion as planned from the T-bills it auctioned off on Monday as total bids reached P70.975 billion, more than three times as much as the amount on offer. This was also higher than P46.74 billion in tenders seen on Dec. 16 for a P15-billion offer.
Broken down, the Treasury borrowed the programmed P7 billion from the 92-day T-bills as tenders for the tenor reached P25.015 billion. The three-month paper was quoted at an average rate of 5.782%, down by 3.6 basis points (bps) from the 5.818% seen at the previous auction, with accepted bid yields ranging from 5.75% to 5.8%. The maturity date of the three-month tenor was adjusted due to a holiday.
The government likewise made a full P7-billion award of the 182-day securities, with bids reaching P23.85 billion. The average rate of the six-month T-bill stood at 5.911%, declining by 6.4 bps from the 5.975% fetched previously, with the BTr accepting tenders with rates ranging from 5.898% to 5.925%.
Lastly, the Treasury raised P8 billion as planned via the 364-day debt papers as demand for the tenor totaled P22.11 billion. The average rate of the one-year debt decreased by 4.6 bps to 5.931% from the 5.977% quoted at the last auction, with the bids accepted carrying rates of 5.9% to 6%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.8286%, 5.9730%, and 6.0491%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
The BTr said it made a full award of the T-bills as the offer was thrice oversubscribed, “reflecting healthy demand despite the higher volume offered.”
“This is a really strong auction. Investors are probably still ‘hungry’ given the lack of issuances during the latter part of 2024. It also shows strong appetite for shorter duration as yields are attractive, especially if against the overnight benchmark,” the first trader said in a text message.
“The lower T-bill rates today moved along from dovish hints by BSP Governor Eli M. Remolona, Jr. that the central bank could consider reducing policy rates in its first meeting this year in February. The strong demand likely reflected surplus liquidity from the holiday season,” the second trader said in an e-mail.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message that expectations of more BSP rate cuts this year caused T-bill yields to decline.
“Treasury bill average auction yields mostly corrected slightly lower, similar to the slight weekly decline in the comparable short-term PHP BVAL yields recently,” Mr. Ricafort said. “This is the first Treasury bill auction for 2025. Treasury bill yields somewhat normalized, being slightly lower versus the comparable short-term PHP BVAL yields since late 2024 and near the latest BSP policy rate of 5.75%.”
The Monetary Board has slashed benchmark borrowing costs by a total of 75 bps since it began its easing cycle in August, bringing its policy rate to 5.75%.
Last month, Mr. Remolona said that while the BSP remains in an easing cycle, 100 bps worth of cuts this year may be “too much” amid inflation concerns. He added that they will continue to bring down benchmark interest rates in “baby steps.”
The BSP chief added that the central bank is “neither more dovish nor less dovish” and is open to delivering another cut in their first policy meeting for this year, which is scheduled on Feb. 20.
On Tuesday, the Treasury will offer P30 billion in reissued seven-year T-bonds with a remaining life of five years and six months.
The BTr plans to raise P213 billion from the domestic market this month, or P88 billion via T-bills and P125 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 or 5.3% of gross domestic product this year. — Aaron Michael C. Sy
