Demand bets on further policy rate cuts
Yields declined in the latest round of treasury bills auction by the government as the P22 billion offer received P71 billion in total tenders, with the surge in liquidity seen indicating strong demand amid expectations of further rate cuts by policymakers.
The Bureau of the Treasury said the auction was 3.2 times oversubscribed, “reflecting healthy demand despite the higher volume offered.”
“With its decision, the (Auction) Committee achieved the full program target of P22.0 billion for the auction,” the Treasury said in a statement.
Calendared for sales were P7 billion in 92-day T-bills, which were fully awarded with the average coupon sealed at 5.782 percent. The total offer reached P25 billion.
The 182-day tenor attracted P23.9 billion in offer for the P7 billion up for sales, of which the Treasury capped its coupon at 5.911 percent.
The one-year bills, or 364-day T-bills, fetched tenders of P22.1 billion, compared with the P8 billion up for sales, with the average coupon sealed at 5.931 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the “correction” in yield followed the slight weekly decline in the comparable short-term PHP BVAL (benchmark reference rate) yields recently at the Philippine Dealing and Exchange Corp.
This also follows an 11-straight week uptick in yield, he said.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona recently signaled an openness “to another rate cut in the central bank’s first rate-setting meeting in 2025,” Ricafort said, noting the “still dovish signal” from the central bank head.
“Earlier BSP Governor Remolona signaled that -1.00 rate cuts for 2025 may be a bit much, but would maintain a monetary easing posture (rate cuts), and also pointed out that no rate cut for 2025 would be too little,” Ricafort added.
