T-bill auction partially filled as yields advance

By Aaron Michael C. Sy, Reporter

THE PHILIPPINE government raised just P19.2 billion from its Treasury bill (T-bill) auction on Monday, with yields climbing as investors remained cautious amid escalating Middle East tensions and rising crude oil prices.

The Bureau of the Treasury (BTr) offered P27 billion across 91-, 182- and 364-day bills but received total bids of P31.5 billion, far below last week’s P76.5 billion in tenders for the same volume.

The shortfall reflects market caution as geopolitical risks push investors toward safer assets.

The 91-day bill collected P8.15 billion, below the P9-billion target, at an average yield of 4.677%, up 36.6 basis points (bps) from last week’s auction.

The 182-day T-bill raised P6.3 billion at 4.795%, climbing 37.8 bps, while the 364-day paper raised P4.75 billion at 4.849%, up 28.5 bps. Accepted yields ranged from 4.55% to 5% across tenors.

At the secondary market before Monday’s auction, 91-, 182- and 364-day bills were quoted at 4.537%, 4.5881% and 4.6658%, according to PHP Bloomberg Valuation Service Reference Rates provided by the Treasury.

“Yields continue to rise, dissuading the market from buying,” a trader said, citing both geopolitical uncertainty and thin market liquidity.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said caution also reflected signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr., who last week indicated the central bank could tighten policy if oil prices exceed $100 per barrel and push inflation above the 2-4% target.

The BSP cut its benchmark interest rate by 25 basis points to 4.25% in February, extending an easing cycle that began in August 2024.

Cumulative reductions have reached 225 bps. The last rate increase was in October 2023, when the policy rate was raised to 6.5%, a 17-year high.

The partial T-bill award precedes a reissued 10-year Treasury bond sale on Tuesday, with the BTr targeting P20 billion to P30 billion.

The government aims to raise P248 billion from the domestic market in March — P108 billion in bills and P140 billion in bonds — to fund this year’s P1.647-trillion deficit, equivalent to 5.3% of gross domestic product.

Market participants said demand remained weak as investors monitor both global crude oil prices and potential central bank action.

Soaring energy costs have increased expectations of inflationary pressure, prompting caution in short-term government debt purchases.

The partial auction highlights the balancing act for Philippine authorities, who continue to fund government operations while managing investor appetite amid heightened global uncertainty.

Yields across all tenors rose sharply, reflecting risk aversion and market concerns over higher borrowing costs if oil prices remain elevated.