THE GOVERNMENT hiked its award of the Treasury bills (T-bills) it offered on Monday as rates dropped across all tenors, with the market pricing in further cuts by the Bangko Sentral ng Pilipinas (BSP) amid below-target inflation last month.
The Bureau of the Treasury (BTr) raised P28.6 billion from the T-bills it auctioned off on Monday, higher than the P25-billion plan.
The offer was nearly four times oversubscribed, with total bids reaching P98.259 billion. However, this was lower than the P116.316 billion in tenders recorded on June 2.
The strong demand prompted the BTr to double its acceptance of noncompetitive bids for the 364-day T-bills to P7.2 billion, it said in a statement.
It added that it made a full award as the average rates for the T-bills were all lower than those fetched at the previous week’s auction.
Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills on Monday as tenders for the tenor reached P20.23 billion. The three-month paper was quoted at an average rate of 5.451%, 0.1 basis point (bp) lower than the 5.452% seen in the previous auction. Tenders accepted by the BTr carried yields of 5.424% to 5.469%.
The government likewise made a full P8-billion award of the 182-day securities it auctioned off as bids amounted to P38.58 billion. The average rate of the six-month T-bill was at 5.524%, 4.1 bps lower than the 5.565% fetched last week, with accepted rates ranging from 5.522% to 5.543%.
Lastly, the Treasury raised P12.6 billion via the 364-day debt papers, higher than the P9-billion plan, as demand for the tenor totaled P39.449 billion. The average rate of the one-year T-bill declined by 2.4 bps to 5.656% from 5.68% previously, with bids accepted having yields of 5.635% to 5.673%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.4413%, 5.6097%, and 5.6814%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.
“Treasury bill average auction yields were again slightly lower after the further easing of the latest inflation… in May 2025, which could support a possible BSP rate cut of 25 bps as early as the next rate-setting meeting on June 19,” Rizal Commercial Banking Corp., Chief Economist Michael L. Ricafort said.
The BTr hiked its T-bill award amid strong demand, investors swamping the offer as they sought to lock in still-high yields in anticipation of further monetary easing, Mr. Ricafort added.
“This time, we have a good consumer price index [print], which confirms the BSP can deliver a cut,” a trader likewise said in a text message.
Philippine headline inflation cooled to an over five-year low of 1.3% in May from 1.4% in April and 3.9% in the same month a year ago.
This brought the five-month average to 1.9%, a tad below the BSP’s 2-4% annual target band. The central bank expects inflation to average 2.3% this year.
Last month, BSP Governor Eli M. Remolona, Jr. said the Monetary Board could deliver two more rate cuts this year in “baby steps” or increments of 25 bps, with the next reduction on the table as early as next week’s policy meeting.
The BSP chief said cooling inflation gives them “plenty of room” to ease their policy stance further, although they don’t want to cut “too much” as this could stoke prices anew.
In April, the Monetary Board resumed its rate-cutting cycle with a 25-bp reduction after a surprise pause in its February review, bringing the policy rate to 5.5%.
The central bank has now reduced benchmark borrowing costs by a total of 100 bps since it began easing rates in August last year.
On Tuesday, the government will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of seven years and three months.
The BTr wants to raise P150 billion from the domestic market this month, or P60 billion through T-bills and P90 billion via 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. — Luisa Maria Jacinta C. Jocson
