THE GOVERNMENT upsized its award of the Treasury bills (T-bills) it offered on Monday as rates dropped across the board amid strong demand for short-term papers, as the market expects the Bangko Sentral ng Pilipinas (BSP) to continue its easing cycle.
The Bureau of the Treasury (BTr) raised P27.6 billion from the T-bills it auctioned off on Monday, higher than the P22-billion plan, as total bids reached P93.776 billion, more than four times as much as the amount on offer. This was also higher than the P70.975 billion in tenders seen on Jan. 7.
The oversubscription prompted the Treasury to double the accepted non-competitive bids for the three- and six-month T-bills to P5.6 billion each, it said in a statement.
Broken down, the Treasury borrowed P9.8 billion from the 91-day T-bills, higher than the programmed P7 billion, as tenders for the tenor reached P37.863 billion. The three-month paper was quoted at an average rate of 5.588%, dropping by 19.4 basis points (bps) from the 5.782% seen at the previous auction, with the BTr only accepting bids with this yield.
The government likewise made a P9.8-billion award of the 182-day securities, above the P7-billion program, as bids reached P31.375 billion. The average rate of the six-month T-bill stood at 5.638%, falling by 27.3 bps from the 5.911% fetched previously, with the BTr only accepting tenders with this rate.
Lastly, the Treasury raised P8 billion as planned via the 364-day debt papers as demand for the tenor totaled P24.538 billion. The average rate of the one-year debt decreased by 4 bps to 5.891% from the 5.931% quoted at the last auction, with bids accepted carrying rates of 5.85% to 5.9%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7511%, 5.8199%, and 5.8562%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
The government upsized its T-bill award as it took advantage of the strong demand for short tenors, a trader said via text message.
Market reference has shifted to short-term papers amid the global bond rout led by US Treasuries due to renewed inflation concerns in the United States.
T-bill yields declined for the second straight week as within-target Philippine inflation bolstered expectations of further BSP cuts this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Headline inflation picked up to 2.9% in December from 2.5% in November, the government reported last week. Still, this was slower than the 3.9% print in the same month in 2023 and was within the 2.3%-3.1% forecast of the BSP.
The December rate brought the full-year 2024 inflation average to 3.2%, slower than 6% in 2023 and marking the first time since 2021 that the consumer price index settled within the BSP’s 2-4% annual target.
BSP Governor Eli M. Remolona, Jr. last week said the Philippine central bank still has room to continue cutting benchmark interest rates as inflation is well within its annual goal, adding that current borrowing costs remain “restrictive.”
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%.
It will hold its first policy meeting for this year on Feb. 20.
On Tuesday, the BTr will offer P30 billion in reissued 10-year Treasury bonds with a remaining life of seven years and eight months. — Aaron Michael C. Sy
