Treasury upsizes T-bill award as BSP easing bets boost demand

THE GOVERNMENT upsized its award of the Treasury bills (T-bills) it offered on Monday as expectations of easing Philippine inflation boosted bets of further monetary easing and drove demand for the papers.

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 P87.28 billion. However, this was lower than the P103.45 billion in tenders recorded on July 28.

The Auction Committee hiked the awarded T-bill volume as all tenors fetched average rates that were lower than secondary market yields, 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 P32.505 billion. The three-month paper was quoted at an average rate of 5.318%, down by 7 basis points (bps) from the 5.388% seen in the previous auction. Yields accepted ranged from 5.3% to 5.324%.

Meanwhile, the government raised P11.9 billion from the 182-day securities, higher than the P8.5-billion program, as tenders amounted to P29.03 billion. The strong demand caused the BTr to double its acceptance of noncompetitive bids for the tenor to P6.8 billion, it said.

The average rate of the six-month T-bill was at 5.535%, down by 8 bps from the 5.543% fetched last week, with accepted yields ranging from 5.53% to 5.545%.

Lastly, the Treasury sold P9.5 billion as programmed in 364-day debt as demand for the tenor totaled P25.745 billion. The average rate of the one-year T-bill went up by 1 bp to 5.637% from 5.627% previously. Tenders accepted carried rates ranging from 5.61% to 5.645%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4152%, 5.557%, and 5.6628%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“Treasury bill average auction yields were again mostly slightly lower for the fifth straight week, a day before the local inflation data that is expected to ease and remain benign,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This would support further rate cuts by the Bangko Sentral ng Pilipinas (BSP), as signaled by monetary authorities recently, he said.

The Philippine Statistics Authority is scheduled to release July inflation data on Tuesday (Aug. 5).

A BusinessWorld poll of 17 analysts yielded a median estimate of 1.2% for the July consumer price index, within the central bank’s 0.5%-to-1.3% forecast for the month.

If realized, the July print would be slower than the 1.4% in June and 4.4% clip in the same month a year ago.

BSP Governor Eli M. Remolona, Jr. earlier said that a rate cut is “on the table” at the Monetary Board’s Aug. 28 policy meeting, which would mark the central bank’s third straight easing move this year.

The Monetary Board in June reduced borrowing costs by 25 bps for a second straight time this year, bringing its policy rate to 5.25%.

The central bank has lowered benchmark interest rates by a cumulative 125 bps since starting its easing cycle in August 2024.

Mr. Remolona also said he is keeping his outlook for two more rate cuts this year. After this month’s review, the Monetary Board has two remaining meetings scheduled in October and December.

The BTr fully awarded its T-bill offer as demand remained high despite declining from the total bids recorded last week, a trader said in a text message.

“The fall in demand could be due to the month end having just passed, as well as the approaching release of the five-year RTB (retail Treasury bonds),” the trader said.

On Tuesday, the government will hold the rate-setting auction for its 31^st offering of RTBs, from which it targets to raise at least P30 billion.

The public offer for the five-year retail bonds is scheduled to run from Aug. 5 to Aug. 15, unless ended earlier.

As part of the offering, the Treasury is also conducting a bond exchange program for holders of eligible three-, seven-, and 10-year T-bonds set to mature from September this year to February next year.

The BTr is looking to raise P225 billion from the domestic market this month, or P125 billion through T-bills and P100 billion via 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