THE GOVERNMENT fully awarded the Treasury bills (T-bills) it offered on Monday even as average yields rose across the board after the Bangko Sentral ng Pilipinas (BSP) left benchmark borrowing costs unchanged at its meeting last week.
The Bureau of the Treasury (BTr) raised P22 billion as planned from the T-bills it auctioned off on Monday as total bids reached P56.275 billion, almost thrice as much as the amount on offer and higher than the P50.113 billion in tenders seen on Feb. 10.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as tenders for the tenor reached P16.05 billion. The three-month paper was quoted at an average rate of 5.318%, rising by 19 basis points (bps) from the 5.128% seen at the previous auction, with accepted rates ranging from 5.18% to 5.398%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P17.52 billion. The average rate of the six-month T-bill stood at 5.662%, 10 bps higher than the 5.562% fetched the previous week. Tenders accepted by the BTr carried yields of 5.58% to 5.695%.
Lastly, the Treasury raised the programmed P8 billion via the 364-day debt papers as demand for the tenor totaled P22.705 billion. The average rate of the one-year debt increased by 5.4 bps to 5.78% from 5.726% previously, with bids accepted having rates of 5.74% to 5.78%.
At the secondary market before the auction, the 91-, 182-, and 364-day T-bills were quoted at 5.1577%, 5.5641%, and 5.7431%, respectively, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data provided by the Treasury.
T-bill rates were higher across all three tenors on Monday due to the BSP’s decision to pause its easing cycle, a trader said in a text message.
“Pricing in of the cut prior to the Monetary Board meeting was massive for the short-term papers,” the trader said.
T-bill auction yields were on a steady decline since the start of the year on expectations of further monetary easing by the BSP and only corrected slightly higher at last week’s auction before the central bank’s first policy meeting for 2025, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.
“The unexpected pause in cuts… somewhat disappointed markets that priced in a 25-bp cut,” Mr. Ricafort said.
“T-bill auction yields are now mostly unusually slightly higher versus the comparable short-term PHP BVAL yields but still the lowest in three months and mostly below the key policy rate of 5.75%, except for the 364-day tenor.”
He added that the rise in yields was slightly offset by signals of a cut in big banks’ reserve requirement ratios (RRR), as this would inject fresh liquidity into the financial system that could be placed in debt instruments.
The BSP on Thursday unexpectedly held benchmark interest rates steady as global uncertainties threaten the inflation and growth outlook.
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.
This marks the BSP’s first pause following three consecutive 25-bp cuts since it began its easing cycle in August 2024.
The decision took the market by surprise as 19 out of 20 analysts polled by BusinessWorld had anticipated a fourth straight 25-bp cut at Thursday’s meeting, and just 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,” BSP Governor Eli M. Remolona, Jr. said after the meeting.
US President Donald J. Trump on Friday kept alive his drumbeat of tariff threats, saying levies on automobiles would be coming as soon as April 2, the day after members of his cabinet are due to deliver reports to him outlining options for a range of import duties as he seeks to reshape global trade, Reuters reported.
It was the latest in a litany of trade actions Mr. Trump has unveiled since taking office for the second time on Jan. 20.
Since his inauguration, he has imposed a 10% tariff on all imports from China, on top of existing levies; announced and then delayed for a month 25% tariffs on goods from Mexico and non-energy imports from Canada; set a March 12 start date for 25% tariffs on all imported steel and aluminum; and on Thursday directed his economics team to devise plans for reciprocal tariffs on every country that taxes US imports.
It has been a blur of orders that Mr. Trump has asserted will level the playing field for American goods abroad and reinvigorate a long-declining US manufacturing base but which have also sown confusion among businesses, irked long-standing US allies and stoked worries among consumers and economists about a renewed upswing in inflation.
Meanwhile, Mr. Remolona said the BSP could cut big banks’ reserve ratio to 5% from 7% within the year.
The central bank 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%.
On Tuesday, the BTr will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of eight years and 11 months.
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 with Reuters
