Treasury upsizes T-bill award as demand surges

THE GOVERNMENT hiked the amount of Treasury bills (T-bills) it sold on Monday as demand for the offer surged, resulting in lower yields across all tenors, with the market also betting on further rate cuts on expectations of weak economic growth.

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 P155.975 billion, above the P126.59 billion in bids recorded last week.

This prompted the Auction Committee to double its acceptance of noncompetitive bids for all tenors to P7.2 billion each, the Treasury said in a statement, as all tenors also fetched average yields that were lower than those seen at the previous week’s auction and the secondary market.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P40.1 billion. The three-month paper fetched an average rate of 4.666%, down by 5.7 basis points (bps) from 4.723% last week. Yields accepted ranged from 4.64% to 4.673%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P57.55 billion. The average rate of the six-month T-bill was at 4.751%, easing by 6.6 bps from 4.817% previously. Tenders awarded carried yields from 4.73% to 4.763%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan, as bids totaled P58.325 billion. The one-year paper’s average yield was at 4.827%, falling by 6.1 bps from 4.888% last week. Accepted rates were from 4.81% to 4.843%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.7664%, 4.8359%, and 4.8912%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government upsized its award of T-bills as yields continued to fall, likely tracking the rally in US Treasuries over the weekend, a trader said in a text message.

“Demand continues to increase, carrying over the momentum from last week.”

In Treasuries, prices rose as investors waited for the US Federal Reserve’s post-meeting update due on Wednesday, Reuters reported.

The yield on benchmark US 10-year notes fell 2 bps to 4.231% on Friday from 4.251% late on Thursday, while the 30-year bond yield fell 1.8 bps to 4.8305%.

The two-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.6 bps to 3.598% from 3.614%.

The T-bills fetched lower rates on expectations of soft fourth-quarter and full-year 2025 Philippine gross domestic product (GDP) data that could support the case for a sixth straight cut by the Bangko Sentral ng Pilipinas (BSP) next month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

This helped drive demand as investors wanted to lock in returns at current levels before the BSP eases its policy stance further, he said.

The government will release fourth-quarter and full-year Philippine GDP data on Thursday (Jan. 29).

The economy likely expanded by 4.2% in the fourth quarter, based on a BusinessWorld poll of 18 economists and analysts. This would be faster than the 4% growth in the third quarter, but slower than 5.3% expansion in the same period in 2024.

This would put full-year growth at 4.8%, below the government’s 5.5%-6.5% target. This would also be slower than the 5.7% expansion in 2024 and the weakest since the 9.5% contraction posted in 2020.

On Friday, BSP Governor Eli M. Remolona, Jr. said that another cut remains uncertain, adding that inflation is their primary concern.

He said that while they will consider the latest GDP data when the Monetary Board meets on Feb. 19, weaker-than-expected growth wouldn’t automatically warrant further easing.

The BSP on Dec. 11 delivered a fifth straight 25-bp reduction in benchmark interest rates, bringing the policy rate to an over three-year low of 4.5%. It has lowered borrowing costs by a total of 200 bps since its rate cut cycle began in August 2024.

Mr. Remolona earlier said they could implement one last cut to help support domestic demand as governance concerns due to a corruption scandal involving state infrastructure projects have dragged both public and private investments, causing growth to slump to a four-year low of 4% in the third quarter of 2025.

Analysts have said that the central bank could ease further to help prop up the economy as inflation remains benign.

On Tuesday, the government is looking to borrow to P50 billion from a dual-tenor Treasury bond (T-bond) offering. It plans to raise between P20 billion and P30 billion each through reissued seven-year papers that have a remaining life of two years and six months, and via reissued 20-year debt with a remaining life of 18 years and three months.

The Treasury wants 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. — Aaron Michael C. Sy