T-bill, bond yields may end mixed on BSP bets

RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week could end mixed on uncertainty over the Bangko Sentral ng Pilipinas’ (BSP) future policy actions.

The Bureau of the Treasury (BTr) will auction off P27 billion in T-bills on Monday, or P9 billion each in 91-, 182-, and 364-day papers.

On Tuesday, the government is targeting to raise up to P40 billion from a dual-tenor T-bond offering, as it could borrow between P15 billion and P25 billion via reissued seven-year papers with a remaining life of two years and five months, and between P10 billion and P20 billion through reissued 25-year debt with a remaining life of 23 years and 11 months.

Yields on the T-bills and T-bonds could track the mixed week-on-week movements at the secondary market following the BSP’s “less hawkish” policy guidance, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Thus, future BSP rate cuts are possible amid relatively slower local economic recovery…,” he said.

At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills fell by 11.79 basis points (bps), 9.17 bps, and 8.35 bps week on week to end at 4.4319%, 4.5437%, and 4.5946%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Feb. 20 published on the Philippine Dealing System’s website.

For its part, the seven-year bond slipped by 0.15 bp week on week to yield 5.7732%, while the rate of the three-year debt, the tenor closest to the remaining life of the papers to be offered on Tuesday, edged down by 0.23 bp to 5.3463%.

Meanwhile, the yield on the 25-year bond went down by 0.12 bp week on week to end at 6.5821%.

On Thursday, the BSP cut the target reverse repurchase rate by 25 bps to 4.25%, the lowest in over three years or since the 3.75% in August 2022. This also matched the benchmark rate set in September 2022.

Rates on the overnight deposit and lending facilities were likewise trimmed by 25 bps each to 3.75% and 4.75%, respectively.

This brought the BSP’s total reductions to 225 bps since it began its series of monetary policy easing in August 2024.

BSP Governor Eli M. Remolona, Jr. said the central bank’s policy path has become “less certain” as investor confidence has become a main concern, adding that the outlook for monetary policy easing would depend on how soon sentiment will recover.

“We see confidence will return very soon, in a few months. If we’re right, then we won’t need further cuts.”

Meanwhile, a bond trader said in an e-mail that the reissued seven-year bond on offer on Tuesday could fetch “great” demand, while the 25-year securities could be “fairly received.”

The trader said the seven-year and 25-year T-bonds could fetch rates of 5.25%-5.275% and 6.5%-6.6%, respectively.

Last week, the BTr raised P37.8 billion via the T-bills it auctioned off, higher than the P27-billion plan as the offer was over five times oversubscribed, with total tenders reaching P142.15 billion.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P49.75 billion. The three-month paper fetched an average rate of 4.35%, down by 14.2 bps from the yield seen the previous week. Bids accepted had yields ranging from 4.332% to 4.363%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P55.65 billion. The average rate of the six-month T-bill was at 4.433%, dropping by 14.5 bps week on week. Tenders awarded carried rates from 4.41% to 4.453%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan as bids totaled P36.75 billion. The one-year paper’s average yield was at 4.512%, falling by 10.3 bps. Accepted bids had rates from 4.496% to 4.56%.

Meanwhile, the reissued seven-year bonds to be offered on Tuesday were last offered on Jan. 27, where the government raised P30 billion as planned during the auction proper at an average rate of 5.324%, above the 3.75% coupon rate. It borrowed an additional P15 billion via the same papers through a tap facility offer.

The reissued 25-year notes were last sold on Oct. 21, 2025, where the government raised P15 billion as planned at an average rate of 6.51%, below the issue’s 6.375% coupon rate.

The Treasury aims 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