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

PHILIPPINE SAVINGS BANK (PSBank) is looking to raise at least P2 billion through an offering of two-year bonds, marking its return to the local debt market after five years.

The thrift banking arm of Metropolitan Bank & Trust Co. (Metrobank) began offering the bonds on Monday. The offer period is set to run until Friday (Aug. 8), unless adjusted by the bank.

PSBank will issue the peso-denominated fixed-rate bonds out of its P40-billion bond program, it said in a disclosure to the stock exchange.

“This will mark the third tranche under the program, following the P6.3-billion issuance in July 2019 and the P4.65-billion issuance in February 2020,” it said.

“Net proceeds will provide the bank with access to long-term funding to support its expansion initiatives and further diversify its funding sources,” PSBank added.

The bonds have a fixed interest rate of 5.875% per annum. They will be sold at a minimum investment amount of P100,000 and in additional increments in multiples of P10,000.

The bonds are scheduled to be issued and listed on the Philippine Dealing & Exchange Corp. on Aug. 18.

The thrift bank has mandated First Metro Investment Corp. and ING Bank N.V. Manila Branch as arrangers for the issuance.

They are also acting as selling agents for the offering, together with PSBank and Metrobank.

PSBank’s net income rose by 0.59% year on year to P1.21 billion in the first quarter amid continued loan growth and lower expenses.

Meanwhile, its listed parent Metrobank’s net profit increased by 8.44% to P12.59 billion in the second quarter from P11.61 billion in the same period last year, bringing its first-half earnings to P24.85 billion, up by 5.25% year on year.

PSBank’s shares closed Monday’s trading session unchanged at P58.50 apiece. — A.M.C. Sy

THE DEVELOPMENT Bank of the Philippines (DBP) is on track to hit its P5-billion income target this year, its top official said.

The state-run bank also plans to restructure its loans to government contractors amid repayment issues to improve its financial position.

“We’re targeting about P5 billion this year, approximately. So, we’re on target. Right now, we’re about half of that,” DBP President and Chief Executive Officer Michael O. de Jesus told reporters on Thursday.

He said this was driven by loans for infrastructure projects.

DBP’s net income stood at P2.53 billion as of end-June, its latest financial statement posted on its website showed.

Mr. De Jesus said the bank will extend the payment terms of their “legacy loans” to help their contractor clients repay their debt and fix past dues that weigh on the DBP’s asset quality.

The bank’s nonperforming loan (NPL) ratio was at about 7% as of end-June, which the official noted is higher than industry average.

“We’re very selective also in our lending. We noticed a few contractors that have problems with collections and all that. Although we’re active in lending to them, we also have to be very careful because we’re monitoring our past dues. And I think there were some contractors that were having some problems with collections. Government contracts. So, they basically were having problems paying their loans, too,” he said.

“We do loans that maybe other banks would not do. But we do it because there’s a developmental aspect. But our priority is to fix those nonperforming loans, to restructure them… We extend the payments. We work with our borrowers to restructure… Sometimes, one or two accounts could increase the past due. Many of them are government contractors. They’re having a hard time collecting now from the government,” Mr. De Jesus added.

He said that while the bank’s current NPL ratio is still “manageable,” they want to eventually bring this down to 5%.

Meanwhile, Mr. De Jesus said the DBP could resume its lending for the jeepney modernization program if the loans could have more equity support as the loan program was suspended earlier this year as the repayment levels of the sector went to as high as 40%.

“We had a very poor experience with the jeepney modernization. Our past due in that field went up to as high as 40%. So, it wasn’t good for us. If we do come back, we have to look at other things. Maybe increasing the equity and all that. But it was not successful for the past two years,” he said.

“We want to help the industry, but there are a lot of issues. Sometimes you’re lending to cooperatives. The drivers, for example, their routes are changed. They have a profitable route, [but] a mayor can change the route to a less profitable route. That affects the payment capability. There are a lot of things going on… We have to change things. There should be more equity support.” — Aaron Michael C. Sy