Gov’t increases T-bill award as yields go down

THE GOVERNMENT upsized the volume of Treasury bills (T-bills) it awarded on Monday as it took advantage of strong market appetite that pushed yields down across all tenors.

The Bureau of the Treasury (BTr) raised P37.8 billion via the T-bills it auctioned off, higher than the P27-billion plan, as the offer was more than four times oversubscribed, with total tenders reaching P113.096 billion. This was also above the P108.1 billion in bids recorded last week.

The Auction Committee increased its award as the auction attracted strong demand, with all T-bill tenors fetching average yields that were lower than those seen at the previous auction and at the secondary market, the Treasury said in a statement.

This led the BTr to double its acceptance of noncompetitive bids for all tenors to P7.2 billion each.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P35.433 billion. The three-month paper fetched an average rate of 4.731%, decreasing by 2.4 basis points (bps) from 4.755% in the previous auction. Yields accepted were from 4.723 to 4.743%.

The Treasury also increased the award for the 182-day debt to P12.6 billion versus the P9-billion program as tenders hit P43.628 billion. The average rate of the six-month T-bill was at 4.85%, easing by 4.5 bps from 4.895% previously. Tenders awarded carried yields from 4.843% to 4.863%.

Lastly, the BTr raised the award for the 364-day securities to P12.6 billion from the P9-billion plan as the tenor attracted bids totaling P34.035 billion. The one-year paper’s average yield was at 4.916%, down by 2.1 bps from 4.937% the previous auction. Accepted rates were from 4.9% to 4.928%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.8009%, 4.9097%, and 4.9746%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government fully awarded its T-bill offer as players swamped the offer, causing yields to go down across the board week on week, the first trader said in a text message.

“This is likely due to increased demand as traders rebalance portfolios and get into position at the start of the 2026,” the trader said.

“Great auction. It’s understandable that the BTr took advantage and doubled the awards of noncompetitive bids,” the second trader said in a text message.

Both traders said Tuesday’s auction of reissued seven-year Treasury bonds (T-bonds) could also see robust demand. The government will offer P30 billion in reissued papers that have a remaining life of five years and four days.

“This gives them (BTr) leeway to reject bids in some of the auctions if bids are too high,” the second trader said.

T-bill rates dropped to track the week-on-week decline seen in yields on their comparable secondary market benchmarks due to fresh policy signals from the Bangko Sentral ng Pilipinas (BSP) chief, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Demand soared as investors likely wanted to lock in still-high yields before a potential cut by the BSP next month, he added.

Last week, BSP Governor Eli M. Remolona, Jr. said a sixth straight rate cut is “on the table” at the Monetary Board’s Feb. 19 meeting, but could be “unlikely” even as inflation remains benign.

“There’s a chance that we may cut some more, and there’s also a chance that we may not move at all. But there’s not a lot of probability that we will raise in 2026,” he said.

The Monetary Board has lowered benchmark borrowing costs by 200 bps since it began its rate-cut cycle in August 2024, bringing the policy rate to 4.5%

The BSP chief has signaled since December that their easing cycle was nearing its end, with further cuts — if any — likely to be limited and data-dependent.

Meanwhile, analysts have said that the central bank could still ease further to help support domestic demand as growth prospects have weakened due to a wide-ranging corruption scandal that has stalled both public and private investments, dragging economic growth.

The BTr is looking to raise P180 billion from the domestic market this month, or P110 billion via T-bills and P70 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.647 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy