Market reflects ‘selective, tactical’ play
The Bureau of the Treasury’s (BTr) treasury bills auction on Monday ended with mixed results for the second consecutive week. The government partially awarded the 90-day paper while granting full awards to the remaining two tenors.
Analysts said the results reflected the market’s “selective, tactical” play while waiting for monetary easing and taking a position on how US President Donald Trump’s tariff war would play out.
In a statement, the BTr said the auction was 2.5 times oversubscribed, attracting a total of P63.3 billion in tenders.
With the decision to make a partial award for the three-month IOUs, BTr raised P24.5 billion for the three tenors against the P25 billion total offer.
The BTr said the 90-day securities were capped at 5.393 percent, excluding bids wider than those of longer tenors offered in the same auction.
The previous comparable rate and the Bloomberg Valuation (BVAL) Service rate were lower at 5.307 percent and 5.3454 percent, respectively.
Tenders for the three-month paper amounted to P12.96 billion, with the BTr partially awarding P7.46 billion, versus the P8 billion program.
The 181- and 363-day treasury bills had average rates of 5.645 percent and 5.726 percent, respectively.
The previous rate for the 182-day IOUs was 5.646 percent, while the BVAL rate was recorded at 5.6819 percent.
For this tenor, the BTr awarded P8 billion as programmed for the half-year paper, with demand reaching P19.03 billion.
The comparable previous rate for the one-year tenor was 5.748 percent, while the BVAL reference rate was 5.7735 percent.
The BTr awarded P9 billion as planned, with tenders reaching P31.34 billion.
The maturity dates across all tenors were adjusted by one day to factor in the upcoming holiday.
John Paolo Rivera, Philippine Institute for Development Studies senior research fellow, told Malaya Business Insight that the market’s weaker appetite for the 90-day Tbill, as seen in both the partial award and rising yield, suggested a cautious short-term outlook among investors.
“The fact that the average rate exceeded both the previous result and the secondary market’s BVAL benchmark indicates that investors were asking for higher returns,” Rivera said.
“Although inflation is easing, market participants might still be positioning conservatively in the short term, unsure about the timing or pace of monetary easing, especially with global risks in play. Investors may be holding off from locking in capital for very short-term tenors, preferring to manage liquidity more flexibly amid upcoming tax deadlines or corporate obligations,” he said.
Meanwhile, Rivera said strong demand for the remaining two tenors and their relatively stable or even slightly lower yields suggest that the market sees better value in locking in rates for longer durations, anticipating a potential downward trend in interest rates in the year’s second half.
“In other words, the mixed auction results reflect a market that’s being selective and strategic, weighing rate expectations and liquidity timing,” Rivera said.
“The muted interest in the 90-day tenor appears more tactical than systemic and could shift quickly with clearer signals from the BSP or changes in liquidity conditions,” he added.
Michael Ricafort, Rizal Commercial Banking Corp.’s chief economist, said the partial award and slightly higher yield for the 90-day tenor could be attributed to preparations related to tax payments/filings ahead of the Bureau of Internal Revenue’s April 15, 2025deadline, “a consistent pattern seen for many years for the seasonal increase in tax payments.”
Ricafort said another factor could be the possible increase in US inflation due to US President Donald Trump’s reciprocal tariffs.
