RATES of the Treasury bills (T-bills) to be offered this week could end mixed following dovish signals from the Bangko Sentral ng Pilipinas (BSP) after it lowered benchmark borrowing rates amid softer growth prospects.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion in 91-day securities and P7.5 billion each in 182- and 364-day papers.
T-bill auction yields could mirror the mixed week-on-week movements seen at the secondary market after the central bank unexpectedly lowered borrowing costs and signaled more rate cuts, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The policy priority is boosting economic growth through monetary easing measures, particularly through BSP rate cuts to reduce borrowing costs to increase demand for loans that increase investments, employment, and other business activities that lead to faster economic growth amid the risk of lower government spending, especially on infrastructure, as well as in view of external risk factors,” he said.
Secondary market yields mostly eased, especially for longer tenors, as “players digested the implications of the very dovish rate cut,” a bond trader said in an e-mail.
At the secondary market on Friday, yields on the 91- and 182- day T-bills rose by 5.53 basis points (bps) and 2.15 bps week on week to end at 4.9153% and 5.198%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Oct. 10 published on the Philippine Dealing System’s website. Meanwhile, the 364-day paper went down by 4.76 bps week on week to close at 5.2786%.
On Thursday, the BSP’s policy-setting Monetary Board delivered its fourth straight 25-bp cut to bring the target repurchase rate to 4.75%, the lowest since September 2022. Only six of the 16 analysts polled by BusinessWorld expected the reduction.
The central bank has now lowered borrowing costs by a total of 175 bps since it began its easing cycle in August 2024.
BSP Governor Eli M. Remolona, Jr. said they cut rates to support growth as the widening corruption scandal involving state flood control and infrastructure projects has affected business sentiment, and, in turn, the outlook for the economy.
He said another reduction is possible at their last meeting for the year scheduled for Dec. 11, with more cuts beyond that also on the table.
Last week, the government made a full award of its T-bill offer, raising P22 billion as the offering was more than three times oversubscribed, with total bids reaching P74.514 billion.
Broken down, the Treasury borrowed P7.5 billion as planned via the 91-day T-bills as total tenders for the tenor reached P19.925 billion. The three-month paper was quoted at an average rate of 4.983%, increasing by 15.5 bps from the previous auction. Yields accepted were from 4.88% to 5.047%.
The government also raised P7.5 billion as programmed from the 182-day securities as tenders amounted to P30.11 billion. The average rate of the six-month T-bill was at 5.128%, up by 5.3 bps from the previous week, with accepted rates spanning from 5.08% to 5.175%.
Lastly, the Treasury sold the planned P7 billion in 364-day debt as demand for the tenor totaled P24.479 billion. The average rate of the one-year T-bill rose by 5.7 bps to 5.228%. Bids awarded carried yields from 5.18% to 5.265%.
The BTr is looking to raise P180 billion from the domestic market this month, or P110 billion via T-bills and P70 billion through Treasury 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
