BTr upsizes T-bill award as yields ease further

THE GOVERNMENT increased the amount of Treasury bills (T-bills) it awarded on Monday as yields continued to go down across the board and as the market expects the Bangko Sentral ng Pilipinas (BSP) to deliver a sixth straight cut next week.

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 oversubscribed, with total tenders reaching P158.173 billion. However, this was below the P176.819 billion in bids recorded last week.

The Auction Committee doubled its acceptance of noncompetitive bids for all tenors to P7.2 billion each as the T-bills fetched average yields lower than those seen during the previous week’s auction and at the secondary market, the Treasury said in a statement.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P55.681 billion. The three-month paper fetched an average rate of 4.492%, down by 8.7 basis points (bps) from 4.579% last week. Yields accepted ranged from 4.44% to 4.525%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P56.582 billion. The average rate of the six-month T-bill was at 4.578%, easing by 9.4 bps from 4.672% previously. Tenders awarded carried yields from 4.52% to 4.609%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan as bids totaled P45.91 billion. The one-year paper’s average yield was at 4.615%, falling by 7.4 bps from 4.689% last week. Accepted rates were from 4.599% to 4.64%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.5705%, 4.6827%, and 4.7374%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The BTr fully awarded its offer as T-bill yields dropped further in anticipation of another rate cut at the BSP’s policy meeting next week amid still-low inflation and weak economic prospects, Rizal Commercial banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He added that demand stayed strong as players likely wanted to lock in returns at current yield levels as they expect further monetary easing.

Headline inflation rose to 2% in January from 1.8% in December but slowed from the 2.9% in the same month last year. This was the fastest print in 11 months or since 2.1% in February 2025.

BSP Governor Eli M. Remolona, Jr. earlier said that a rate cut is possible at the Monetary Board’s Feb. 19 meeting if they see the need to support domestic demand, especially after economic growth hit a five-year low last year due to the ongoing fallout from a corruption scandal that stalled both public and private spending.

However, the central bank last week reiterated it was nearing the end of its current easing cycle. The Monetary Board has slashed benchmark borrowing costs by 200 bps since August 2024, bringing the policy rate to 4.5%.

The government upsized its T-bill award as rates continued to go down amid strong demand, even as bids were lower from the week prior as players are repositioning before a jumbo 10-year bond offering next week, a trader said in a text message.

The BTr wants to raise at least P30 billion via new 10-year benchmark bonds, which it will offer to primary dealers and holders of government securities maturing over the next year.

The rate-setting auction will be held on Feb. 18, with the offer period set to run until Feb. 20. The offering also includes a bond exchange component for holders of maturing debt. The new bonds are scheduled to be issued on Feb. 23.

In April last year, the government raised P300 billion via fresh 10-year fixed-rate benchmark notes, above the initial P30-billion program. The offering was done through a new issuance format targeting institutional investors like corporates, cooperatives, trust funds, retirement funds, and provident funds.

On Tuesday, the government will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of seven years and six months.

The BTr wants to raise P308 billion from the domestic market this month, or P108 billion via T-bills and up to P200 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. — Aaron Michael C. Sy