The Bureau of the Treasury (BTr) upsized the amount it awarded for the auctioned treasury bills on Monday, particularly for the one-year IOUs, amid brisk demand for the short-term securities.
The BTr said the auction was 3.4 times oversubscribed, drawing P84.3 billion in total tenders.
This prompted the BTr to raise the auction’s total award to P28.6 billion from the initial P25 billion program. The BTr increased the accepted amount for the one-year securities to P12.6 billion from the initial offer of P9 billion.
Meanwhile, P8 billion was awarded each for the 91-day and 182-day securities, as planned.
The 91-, 182- and 364-day IOUs fetched average rates of 5.468 percent, 5.551 percent and 5.694 percent, respectively.
These are all lower than previous auction rates.
The comparable Bloomberg Valuation Service rates are 5.455 percent for the three-month tenor, 5.61 percent for the six-month tenor and 5.74 percent for the one-year tenor.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies (PIDS), said the fall in rates across all tenors reflects a combination of strong market liquidity and declining inflation expectations, especially after April’s inflation print, which marks the lowest rate in six years.
“Investors are showing renewed appetite for safe, short-term securities, with expectations that the BSP will cut rates further this year and the Fed’s more dovish signals,” Rivera said.
“The upsized award for the 364-day T-bill likely reflects intent to lock in cheaper borrowing costs for longer, given strong demand and attractive rates. It’s also possible that BTr is managing its borrowing mix, preferring to frontload issuances to hedge against future volatility amid geopolitical and trade uncertainties,” he added.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said: “The drop in rates for T-bills may reflect the anticipation of a rate cut this coming June as inflation and GDP growth both fell below targets.”
Meanwhile, Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said some investors were locking in rates amid the still relatively higher yields, before they go down in the coming months.
