THE GOVERNMENT increased the amount of Treasury bills (T-bills) it awarded on Monday as rates dropped across the board, with players opting for shorter tenors as they remained cautious over the Trump administration’s shifting trade policies.
The Bureau of the Treasury (BTr) raised P28.4 billion from the T-bills it auctioned off, higher than the P25-billion plan, as the offer was almost four times oversubscribed, with total bids reaching P92.163 billion. However, this was lower than the P102.906 billion in tenders recorded on July 14.
The Auction Committee upsized the T-bill award as all tenors fetched average rates that were lower than those quoted at the previous auction and prevailing secondary market rates, the BTr said in a statement.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as total tenders for the tenor reached P35.648 billion. The three-month paper was quoted at an average rate of 5.422%, down by 5.3 basis points (bps) from the 5.475% seen in the previous auction, with bids accepted having rates of 5.39% to 5.422%.
Meanwhile, the government raised P11.9 billion from the 182-day securities, higher than the P8.5-billion program, as bids amounted to P27.14 billion. The strong demand prompted the BTr to double its acceptance of non-competitive bids for the tenor to P6.8 billion, it said.
The average rate of the six-month T-bill was at 5.566%, slipping by 0.9 bp from the 5.575% fetched last week, with accepted yields ranging from 5.55% to 5.574%.
Lastly, the Treasury sold P9.5 billion via the 364-day debt papers as programmed as demand for the tenor totaled P29.375 billion. The average rate of the one-year T-bill inched down by 1.9 bps to 5.631% from 5.65% previously. Accepted bids carried rates ranging from 5.6% to 5.649%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4506%, 5.5710%, and 5.6578%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
The Treasury hiked its T-bill award again this week to take advantage of lower rates and strong demand as the market continued to flock to shorter tenors, a trader said in a text message.
“Uncertainty surrounding US President Donald J. Trump’s tariffs dissuaded investors from changing their cautious behavior,” the trader said.
Investors were hoping for some progress in trade talks ahead of Mr. Trump’s Aug. 1 tariff deadline, with US Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union, Reuters reported.
Philippine President Ferdinand R. Marcos, Jr. will also meet Mr. Trump this week, hoping Manila’s status as a key Asian ally will secure a more favorable trade deal before the deadline.
Mr. Marcos will be the first Southeast Asian leader to meet Mr. Trump in his second term. Mr. Trump has already struck trade deals with two of Manila’s regional partners, Vietnam and Indonesia, driving tough bargains in trade talks even with close allies that Washington needs to keep onside in its strategic rivalry with China.
The United States had a deficit of nearly $5 billion with the Philippines last year on bilateral goods trade of $23.5 billion. Mr. Trump this month raised the threatened “reciprocal” tariffs on imports from the Philippines to 20% from 17% threatened in April.
T-bill yields continued to decline as tariff uncertainties and their potential impact on the global economy could lead to more rate cuts by the US Federal Reserve this year, which would also support further policy easing by the Bangko Sentral ng Pilipinas (BSP), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The US central bank is widely expected to hold rates steady at the 4.25%-4.5% range in its July 29-30 meeting. However, Federal Reserve Governor Christopher Waller last week repeated his call for a rate cut this month, Reuters reported.
Most of his colleagues, including Chair Jerome H. Powell, have argued a pause is warranted to judge the true inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October.
Meanwhile, BSP Governor Eli M. Remolona, Jr. has said that they have room for two more rate cuts this year amid benign inflation.
In June, the central bank delivered a second straight cut, reducing benchmark borrowing costs by 25 bps to bring the key rate to 5.25%. The Monetary Board has now lowered interest rates by a total of 125 bps since it began its easing cycle in August last year.
On Tuesday, the government will offer P20 billion in reissued seven-year Treasury bonds with a remaining life of two years and nine months. — Aaron Michael C. Sy with Reuters
