BTr upsizes Treasury bill award as yields drop across all tenors

THE GOVERNMENT increased the volume of Treasury bills (T-bills) it awarded on Monday as yields continued to decline after the Bangko Sentral ng Pilipinas (BSP) reduced borrowing costs again last week and signaled it has room to cut further.

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 offering was over thrice oversubscribed, with total tenders reaching P96.82 billion. However, this was below the P142.15 billion in bids recorded last week.

The Auction Committee doubled its acceptance of noncompetitive bids for all tenors to P7.2 billion each as it saw strong demand and as average yields were 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 P36.35 billion. The three-month paper fetched an average rate of 4.24%, down by 11 basis points (bps) from 4.35% last week. Bids accepted had yields ranging from 4.204% to 4.264%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P35.26 billion. The average rate of the six-month T-bill was at 4.357%, dropping by 7.6 bps from 4.433% previously. Tenders awarded carried rates from 4.288% to 4.4%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan as bids totaled P25.21 billion. The one-year paper’s average yield was at 4.501%, inching down by 1.1 bps from 4.512% last week. Accepted bids had rates from 4.44% to 4.57%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.4319%, 4.5437%, and 4.5946%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

The government fully awarded its T-bill offer as yields were lower for the seventh straight week after the BSP cut rates again and gave “less hawkish” policy signals, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Last week, the BSP cut the target reverse repurchase rate by 25 bps for the sixth straight meeting to 4.25%, the lowest in over three years.

It has now trimmed borrowing costs by a cumulative 225 bps since it began its easing cycle 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.”

The BTr hiked its award again as yields continued to go down week on week despite lower tenders, a trader said in a text message.

“The fall in yields is diminished compared to previous weeks. Similarly, the demand for the T-bills seems to be dwindling as well. This is likely due to the success and high demand for the recent new issuance of the 10-year FXTN 10-74 in last week’s jumbo auction,” the trader added.

The government raised a total of P297.94 billion from its offering of new 10-year fixed-rate Treasury notes (FXTN), made up of P235 billion in new money and P62.94 billion via the switch program, the BTr said on Friday.

This was well above the initial P30-billion offer. The benchmark bonds fetched at a coupon rate of 5.925%.

On Tuesday, the government is targeting to raise up to P40 billion from a dual-tenor Treasury bond (T-bond) offering. Broken down, 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.

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. — A.M.C. Sy