The government increased it Prize of Treasury Bills (T-Bill) It was introduced on Monday Yields across all tenors have declined due to expectations of a rate cut by the US Federal Reserve this week as well as monetary easing domestically.
The Bureau of the Treasury (BTR) raised P25 billion from the auctioned T-bills, more than the P22-billion plan, as the offering was almost four times oversubscribed, bringing total bids to P85.365 billion. However, this was lower than the P95.17 billion in tenders filed on October 20.
The auction committee increased its T-bill award because all tenants received average rates that were lower than rates quoted in previous auctions and the secondary market, BTR said in a statement.
Broken down, the Treasury borrowed P7 billion as planned through 91-day T-bills as total tenders for the period reached P29.555 billion. The three-month paper was quoted at an average rate of 4.858%, down 2.6 basis points (bps) from 4.884% in the previous auction. Accepted yields ranged from 4.8% to 4.878%.
Meanwhile, the government increased the prize for 182-day securities to P10.5 billion, higher than the P7.5-billion plan, as there was demand for P33.45 billion over the period. This prompted BTR to double its acceptance of non-competitive bids to P6 billion for the period, it said.
The average rate on six-month T-bills was 5.044%, down 1.4 bps from the 5.058% achieved last week, with rates accepted ranging from 5% to 5.058%.
Finally, the Treasury sold P7.5 billion programmed in 364-day loans as tender for a total of P22.36 billion. The average rate on one-year T-bills decreased by 0.4 bp to 5.093% from 5.097% earlier. The bids provided yielded yields ranging from 5.02% to 5.128%.
In the secondary market ahead of Monday's auction, 91-, 182- and 364-day T-bills were quoted at 4.9263%, 5.0977% and 5.1626%, respectively, based on PHP Bloomberg Valuation Service reference rate data provided by the Treasury.
One trader said in an e-mail that the government fully honored its T-bill offer because rates have been steadily going down.
“Sideways downward movement is likely due to the FOMC (Federal Open Market Committee) rate cut this week, given the US CPI (Consumer Price Index) results last week as well as the release of light local market data for the next few weeks,” the trader said. “In addition, low market activity this morning was also another factor.”
Rizal Commercial Banking Corp. chief economist Michael L. “T-bill average auction yields were lower ahead of a widely expected 25-bp Fed rate cut at the next rate-setting meeting on Oct. 29, 2025, following recent dovish signals from most Fed officials,” Ricafort said in a Viber message.
The Fed is widely expected to lower its benchmark interest rate by another quarter percentage point from 4% to 4.25% when it decides on policy on Wednesday, a view supported by lower-than-expected inflation data on Friday, Reuters reports.
Since rate changes are already factored into asset prices, markets are likely to be more sensitive to any forward-looking language from Fed Chairman Jerome H. Powell, with the central bank expected to cut rates further at its next meeting in December.
Perhaps driving the crisis over the Fed's decision-making ability is the lack of data provided by the government since the shutdown began on Oct. 1, including a delay in releasing jobs at a time of growing concerns about the health of the labor market.
Mr. Ricafort said expectations of more rate cuts from the Bangko Sentral ng Pilipinas (BSP) also helped push T-bill yields lower.
Monetary board member Benjamin E. Diokno said in a Bloomberg Television interview on Monday that a fifth consecutive 25-bp rate cut is likely at their Dec. 11 meeting, with more cuts next year also possible amid the economic fallout from a widespread corruption scandal involving government infrastructure projects.
Tuesday's auction was the last auction of this month. The government raised P183 billion from the domestic market in October, more than the P180-billion plan, as it made full awards in auctions of all its T-bills and treasury bonds (T-bonds) and increased its awarded volume on Tuesday.
For November, BTR plans to raise P158 billion from the local market, or P88 billion through T-bills and P70 billion through T-bonds.
The government borrows from local and foreign sources to finance its budget deficit, which stands at P1.56 trillion or 5.5% of GDP this year. , AMC Sy
