RJ JOQUICO-UNSPLASHTHE GOVERNMENT made a full award of the Treasury bills (T-bills) it offered on Monday at mostly lower rates on expectations that Philippine headline inflation slowed last month and with investors swamping the offer.
The Bureau of the Treasury (BTr) raised P22 billion as planned from the T-bills it auctioned off on Monday as total bids reached P85.474 billion, almost four times as much as the amount on offer and higher than the P83.711 billion in tenders recorded on Feb. 24.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as tenders for the tenor reached P37.48 billion. The three-month paper was quoted at an average rate of 5.283%, easing by 4.6 basis points (bps) from the 5.329% seen at the previous auction, with accepted rates ranging from 5.28% to 5.358%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P24.51 billion. The average rate of the six-month T-bill was at 5.61%, 6.2 bps lower than the 5.672% fetched last week, with the BTr only accepting bids with this yield.
Lastly, the Treasury raised the programmed P8 billion via the 364-day debt papers as demand for the tenor totaled P23.484 billion. The average rate of the one-year debt rose by 1.6 bps to 5.77% from 5.754% previously, with bids accepted carrying yields of 5.625% to 5.788%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.2794%, 5.6116%, and 5.7842%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
“Treasury bill average auction yields were mostly slightly lower after rising for three straight weeks after the comparable short-term PHP BVAL yields were mostly marginally lower week on week ahead of the latest local inflation data that is expected to ease from 2.9% in January,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“T-bill auction yields are now again slightly lower versus the comparable short-term PHP BVAL yields,” he added.
Headline inflation likely slowed in February as prices of rice and other key commodities declined, analysts said.
A BusinessWorld poll of 18 analysts yielded a median estimate of 2.6% for the February consumer price index (CPI), well within the Bangko Sentral ng Pilipinas’ (BSP) 2.2%-3% forecast for the month.
If realized, February inflation would be slower than the 2.9% in January and the 3.4% clip in the same month in 2023. This would also be the slowest pace in four months or since the 2.3% recorded in October.
The Philippine Statistics Authority will release February CPI data on Wednesday (March 5).
The BTr fully awarded its T-bill offer despite the mixed yield movements as it saw “good demand as some investors are getting comfortable again on path of policy rates moving forward,” a trader said in a text message.
The BSP last month unexpectedly held benchmark interest rates steady in a “prudent” move as global uncertainties cloud the outlook for growth and inflation, leaving the target reverse repurchase rate unchanged at 5.75%.
This was the Monetary Board’s first pause following three consecutive 25-bp cuts since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said uncertainty over the trade policy of US President Donald J. Trump and its potential impact on the Philippines led to the decision to keep rates unchanged for now. However, he said the BSP continues to be in an easing cycle, with the pause letting the central bank hedge itself against the risk of policy reversal.
He added that the central bank will likely continue reducing interest rates by 25 bps at a time, with 50 bps in cut for this year still likely.
The Monetary Board’s next policy meeting is on April 3.
Analysts likewise expect the BSP to stay in monetary easing mode, with some expecting a rate cut next month, as weak economic growth, manageable inflation, and likely limited impact from Mr. Trump’s tariff policies giving the central bank ample policy space.
On Tuesday, the BTr will offer P30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of five years and four months.
The Treasury is looking to raise P147 billion from the domestic market this month, or P22 billion from T-bills and P125 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
