Government increased the amount Of On Monday it sold treasury bills (T-bills). As a result of increased demand for the offer With yields low across all tenors, the market is also betting on further rate cuts Weak economic growth expectations.
The Bureau of the Treasury (BTR) raised P37.8 billion through auctioned T-bills, more than the P27-billion plan as the offer was oversubscribed, bringing total tenders to P155.975 billion, higher than the P126.59 billion in bids recorded last week.
This prompted the auction committee to double the acceptance of non-competitive bids to P7.2 billion for all tenants, as all tenants received even lower average yields, Treasury said in a statement. Compared to the AUC seen in the previous weektion and secondary markets.
Broken down, the government awarded P12.6 billion in 91-day T-bills, more than the P9-billion plan, as demand for the term reached P40.1 billion. The average three-month paper rate stood at 4.666%, down 5.7 basis points (bps) from 4.723% last week. The allowed yield ranged from 4.64% to 4.673%.
The Treasury borrowed P12.6 billion through a 182-day loan compared to the P9-billion program as the tenders reached P57.55 billion. The average rate on six-month T-bills was 4.751%, down 6.6 bps from 4.817% previously. The yield of the tenders awarded ranged from 4.73% to 4.763%.
In the end, BTR raised P12.6 billion from 364-day securities, which is more than the P9-billion plan, as bids totaled P58.325 billion. The average yield on one-year paper was 4.827%, down 6.1 bps from 4.888% last week. The accepted rates ranged from 4.81% to 4.843%.
In the secondary market ahead of Monday's auction, 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 rate data provided by the Treasury.
As yields continued to decline, the government increased its appreciation of T-bills, likely tracking the rally in US Treasuries. weekend, one trader said in a text message.
“Demand continues to increase, maintaining last week's momentum.”
Treasury prices rose as investors awaited an update from the US Federal Reserve after its meeting on Wednesday, Reuters reported.
Yields on benchmark US 10-year notes fell 2 bps to 4.231% on Friday, from 4.251% late Thursday, while the 30-year bond yield fell 1.8 bps to 4.8305%.
The two-year note yield, which typically moves in line with interest rate expectations for the Federal Reserve, fell 1.6 bps to 3.598% from 3.614%.
Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said in a Viber message that T-bills received lower rates on expectations of softening fourth-quarter and full-year 2025 Philippine gross domestic product (GDP) data, which could support the case for a sixth consecutive cut by the Bangko Sentral ng Pilipinas (BSP) next month.
This helped boost demand as investors wanted to lock in returns at current levels before the BSP further eases its policy stance, he said.
The government will release fourth-quarter and full-year Philippine GDP data on Thursday (January 29).
Based on this, the economy is likely to grow by 4.2% in the fourth quarter businessworld Survey of 18 economists and analysts. This will be faster than the 4% growth in the third quarter, but slower than the 5.3% expansion over the same period in 2024.
This will take the full year growth rate to 4.8%, which is below the government's target of 5.5%-6.5%. That would 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 another cut remains uncertain, adding that inflation is his primary concern.
He said when the monetary board meets on February 19 they will consider the latest GDP data, but weaker-than-expected growth will not automatically warrant further easing.
The BSP cut benchmark interest rates by 25-bp for the fifth consecutive time on December 11, bringing the policy rate to a three-year low of 4.5%. This has reduced borrowing costs by a total of 200 bps since the start of the rate cut cycle in August 2024.
Mr Remolona had earlier said he may impose one last cut to help support domestic demand as governance concerns over a corruption scandal linked to state infrastructure projects have pulled both public and private investment, pushing growth to a four-year low of 4% in the third quarter of 2025.
Analysts have said the central bank may ease further to help prop up the economy as inflation remains soft.
On Tuesday, the government is considering borrowing up to P50 billion from the offering of dual-tenure treasury bonds (T-bonds). It plans to raise between P20 billion and P30 billion through re-issuing seven-year debentures that have a remaining life of two years and six months, and by re-issuing 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 through T-bills and P70 billion through T-bonds.
The government borrows from local and foreign sources to finance its budget deficit, which this year stands at P1.647 trillion, or 5.3% of GDP. — Aaron Michael C. Cy