By Aaron Michael C. Sy, Reporter
THE GOVERNMENT increased the volume of Treasury bills awarded on Monday despite softer demand, with mixed yields reflecting expectations of another rate cut by the Bangko Sentral ng Pilipinas (BSP) next month.
The Bureau of the Treasury (BTr) raised P25 billion from the auction, above its P22-billion program. Total tenders reached P84.015 billion, more than four times the offer, though below P98.311 billion at the auction last week.
The Auction Committee fully awarded bids across all tenors as average yields landed below secondary market levels, the Treasury said.
The 91-day T-bill fetched an average rate of 4.842%, up 2.1 basis points (bps) from a week earlier, with the government accepting P7 billion as planned. Demand reached P26.19 billion, with accepted yields ranging from 4.825% to 4.854%.
The Treasury increased its award for the 182-day tenor to P10.5 billion from P7.5 billion after tenders hit P29.47 billion.
The BTr doubled its noncompetitive bucket for the tenor to P6 billion. The average rate declined by 1.1 bps to 4.97%, with accepted bids ranging from 4.923% to 5%.
For the 364-day T-bill, the BTr raised P7.5 billion as planned as demand reached P28.355 billion. The one-year paper averaged 5.017%, down 3.7 bps week on week, with accepted yields at 5% to 5.028%.
Ahead of the auction, the 91-, 182-, and 364-day T-bills traded at 4.8914%, 5.0425%, and 5.1082%, respectively, based on PHP Bloomberg Valuation (BVAL) service reference rates.
A trader said the decline in overall bids reflected weaker market activity amid political tensions that prompted several government agencies to shift temporarily to work-from-home arrangements.
The trader added that market participants were also returning from the Money Market Association of the Philippines’ annual convention at the weekend.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said T-bill yields have been trending slightly lower for most of the past five months, except for the shortest tenor this week.
He noted that short-term PHP BVAL yields fell by 0.03 bp to 0.07 bp week on week, helping pull auction rates lower.
He said the slowdown in GDP growth to 4% in the third quarter — the weakest in more than four years — and benign inflation at 1.7% support another 25-bp BSP cut on Dec. 11.
The policy priority is to shore up growth while inflation remains within manageable levels, he added.
Finance Secretary and Monetary Board member Ralph G. Recto earlier told BusinessWorld that a 25-bp cut before yearend is likely. He also floated the possibility of a 50-bp move while ruling out an off-cycle adjustment.
The BSP cut its benchmark rate by 25 bps last month, bringing the policy rate to 4.75%. The central bank has now cut a total of 175 bps since August last year. The final policy meeting for 2025 is set for Dec. 11.
Mr. Ricafort said lower crude prices, subdued inflation pressures globally and expectations of further US Federal Reserve easing offer added room for the BSP to reduce rates.
He said the peso’s stability would remain a key factor, with the currency hovering near its record low of 59.26 a dollar.
He added that recent gains in the local bond market and lower yields might have attracted some foreign inflows, helped by market speculation that Philippine debt could enter the JPMorgan Global Emerging Market Bond Index.
The Treasury will offer P35 billion in bonds on Tuesday — P20 billion in 10-year debt with six years and 10 months remaining, and P15 billion in 20-year securities with 18 years and six months left.
The government plans to raise P158 billion from the domestic market this month, including P88 billion in T-bills and P70 billion in bonds. It relies on local and foreign borrowing to fund its budget deficit, capped at P1.56 trillion or 5.5% of gross domestic product this year.