THE GOVERNMENT hiked its award of Treasury bills (T-bills) auctioned off on Monday as rates mostly declined on expectations that Philippine headline inflation eased further in May.
The Bureau of the Treasury (BTr) raised P28.6 billion from the T-bills it offered on Monday, higher than the P25-billion plan, as total bids reached P116.316 billion or almost five times the amount placed on the auction block, and also higher than the P84.255 billion in tenders recorded on May 26.
The oversubscription prompted the auction committee to double its acceptance of non-competitive bids for the 364-day T-bills to P7.2 billion, the BTr said in a statement.
Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills on Monday as tenders for the tenor reached P31.675 billion. The three-month paper was quoted at an average rate of 5.452%, 1.6 basis points (bps) lower than the 5.468% seen in the previous auction. Tenders accepted by the BTr carried yields of 5.434% to 5.463%.
The government likewise made a full P8-billion award of the 182-day securities it auctioned off as bids for the paper amounted to P41.655 billion. The average rate of the six-month T-bill was at 5.565%, 1.4 bps higher than the 5.551% fetched last week, with accepted rates ranging from 5.553% to 5.579%.
Lastly, the Treasury raised P12.6 billion via the 364-day debt papers, higher than the P9-billion program, as demand for the tenor totaled P42.986 billion. The average rate of the one-year T-bill slipped by 0.8 bp to 5.68% from 5.694% previously, with bids accepted having yields of 5.65% to 5.69%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.433%, 5.5968%, and 5.7253%, respectively, based on the PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
The government fully awarded its T-bill offer as rates mostly eased on expectations that headline inflation slowed further last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“[This] could justify possible 25-bp Bangko Sentral ng Pilipinas (BSP) rate cut at the next rate-setting meeting on June 19, … consistent with the recent signals from BSP Governor Eli M. Remolona, Jr. of two 25-bp rate cuts for the rest of 2025,” he said.
Bets of a benign May inflation print and further monetary easing this month led to mostly lower T-bill rates, a trader likewise said in a text message.
The BTr upsized its T-bill award to take advantage of the strong demand, with yields mostly in line with secondary market levels, the trader added.
A BusinessWorld poll of 17 analysts yielded a median estimate of 1.3% for the May consumer price index (CPI), slower than the 1.4% in April and 3.9% in the same month a year ago. This is within the BSP’s 0.9%-1.7% forecast for the month.
If realized, this would be the lowest CPI in more than five years or since the 1.2% in November 2019.
The Philippine Statistics Authority is scheduled to release May inflation data on Thursday (June 5).
Mr. Remolona last month said the Monetary Board could deliver two more rate cuts this year amid easing inflation, still in “baby steps” or increments of 25 bps, with another reduction on the table at their June 19 review.
The Monetary Board in April reduced the target reverse repurchase rate by 25 bps to 5.5%, bringing total cuts thus far to 100 bps since it began its easing cycle in August last year.
On Tuesday, the government will offer P30 billion in reissued seven-year Treasury bonds (T-bonds) with a remaining life of five years and one month.
The BTr is looking to raise P230 billion from the domestic market this month, or P100 billion via Treasury bills and P130 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy
