RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week may rise after the Bangko Sentral ng Pilipinas (BSP) unexpectedly paused its easing cycle.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.
On Tuesday, the government will offer P30 billion in reissued 10-year T-bonds with a remaining life of eight years and 11 months.
T-bill and T-bond auction yields may track the broad rise in secondary market rates after the BSP surprised markets by keeping benchmark rates unchanged, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Secondary market rates rose sharply after the BSP’s surprise decision but corrected slightly to end the week as BSP Governor Eli M. Remolona, Jr. hinted at another cut in big banks’ reserve requirement ratio (RRR), a trader said in an e-mail.
At the secondary market on Friday, the 182- and 364-day T-bills rose by 6.82 basis points (bps) and 2.3 bps week on week to end at 5.5641% and 5.7431%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Feb. 14 published on the Philippine Dealing System’s website. Meanwhile, the 91-day paper went down by 1.2 bps to yield 5.1577%.
For its part, the 10-year bond saw its yield increase by 1.35 bps week on week to end at 6.1313%.
The BSP unexpectedly held interest rates steady on Thursday as global uncertainties threaten the outlook for inflation and growth.
At its first policy meeting of the year, the Monetary Board left the target reverse repurchase rate unchanged at 5.75%. Rates on the overnight deposit and lending facilities were also kept at 5.25% and 6.25%, respectively.
The central bank had cut rates by 25 bps at each of its last three meetings since August 2024.
The BSP’s decision came as a surprise after 19 out of 20 analysts polled by BusinessWorld had anticipated a 25-bp cut at Thursday’s meeting. Only one analyst expected the BSP to keep rates steady.
“Normally, we would have cut further, but something has changed. The thing that has changed is the uncertainty over what’s going on globally, especially the uncertainty over trade policy,” Mr. Remolona said.
Meanwhile, he said the BSP could cut big banks’ reserve ratio to 5% from 7% within the year.
The BSP in October reduced the RRR for universal and commercial banks and nonbank financial institutions with quasi-banking functions by 250 bps to 7% from 9.5%.
Last week, the BTr raised P22 billion as planned from the T-bills it auctioned off as total bids reached P50.113 billion or more than twice the amount on offer.
Broken down, the Treasury borrowed the programmed P7 billion via the 91-day T-bills as tenders for the tenor reached P19.238 billion. The three-month paper was quoted at an average rate of 5.128%, rising by 2.7 bps from the previous auction, with accepted rates ranging from 5.10% to 5.148%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P14.95 billion. The average rate of the six-month T-bill stood at 5.562%, 8.5 bps higher than the previous week. Tenders accepted by the BTr carried rates of 5.5% to 5.59%.
Lastly, the Treasury raised P8 billion as planned via the 364-day debt papers as demand for the tenor totaled P15.925 billion. The average rate of the one-year debt increased by 5.5 bps to 5.726%, with bids accepted having rates of 5.69% to 5.765%.
Meanwhile, the reissued 10-year bonds on offer on Tuesday were last auctioned off on Jan. 21, where the BTr raised P30 billion as planned at an average rate of 6.251%.
The Treasury is looking to raise P203 billion from the domestic market this month, or P88 billion from T-bills and P115 billion from 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. — A.M.C. Sy
