THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday as rates continued to go down across the board on expectations that benchmark borrowing costs will ease further.
The Bureau of the Treasury (BTr) raised P25 billion as planned from the T-bills it auctioned off as the offering was nearly five times oversubscribed, with total bids reaching P117.84 billion. However, this was lower than the P154.254 billion in tenders recorded on Sept. 15.
The Auction Committee made a full award of its offer amid the strong demand and as all T-bill tenors fetched average rates that were all lower than those seen at last week’s auction and prevailing secondary market yields, the BTr said in a statement.
Broken down, the Treasury borrowed P8.5 billion as planned via the 90-day T-bills as total tenders for the tenor reached P35.805 billion. The three-month paper was quoted at an average rate of 4.883%, down by 6.7 basis points (bps) from the 4.95% recorded in the previous auction. Yields accepted were from 4.815% to 4.924%.
The government also raised P8.5 billion as programmed from the 182-day securities as tenders amounted to P41.35 billion. The average rate of the six-month T-bill was at 5.081%, easing by 6.7 bps from the 5.148% fetched last week, with accepted rates spanning from 5.025% to 5.11%.
Lastly, the Treasury sold the planned P8 billion in 364-day debt as demand for the tenor totaled P40.685 billion. The average rate of the one-year T-bill dropped by 7.7 bps to 5.195% from 5.272% previously. Bids awarded carried yields from 5.145% to 5.244%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.9458%, 5.1976%, and 5.3041%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
“T-bills continue to trend lower as investors lock in short-term yields on the view that policy rates may have room to go down further in the medium term,” a trader said in a text message.
The offer was met with strong demand as players continue to reinvest their excess liquidity following a large bond maturity earlier this month, the trader added.
T-bill rates dropped for the 12th straight week, following the decline in secondary market yields, on bets of further monetary easing from both the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The BSP last month lowered borrowing costs by 25 bps for a third straight meeting, bringing the target reverse repurchase rate to 5%. It has now slashed benchmark rates by a cumulative 150 bps since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. has left the door open to one last cut this year to support growth if needed, which would likely mark the end of its current easing cycle. The Monetary Board’s last two meetings this year are scheduled in October and December.
Meanwhile, the Fed last week lowered its target rate by 25 bps to the 4%-4.25% range, which was its first cut since December. This brought its total reductions since September 2024 to 125 bps.
Its “dot plot” showed projections of two more rate cuts this year. Traders are pricing in 44 bps of easing in the two policy meetings left for the year, Reuters reported.
On Tuesday, the government will offer P35 billion in a dual-tranche Treasury bond (T-bond) offering, or P10 billion in reissued seven-year papers with a remaining life of two years and seven months, and P25 billion in reissued 20-year securities with a remaining life of 18 years and eight months.
The BTr is looking to raise P220 billion from the domestic market this month, or P100 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 P1.56 trillion or 5.5% of gross domestic product this year. — Aaron Michael C. Sy
