The Bureau of the Treasury (BTr) sold P22 billion worth of Treasury bills at the auction on Monday as the short-term IOUs drew strong investor demand.
The T-bill auction, livestreamed on Facebook, was almost four times oversubscribed, attracting P85.5 billion in total tenders.
Specifically, P7 billion each was awarded to the two shorter tenors (91- and 182-days), while P8 billion went to the one-year paper.
The 91-, 182- and 364-day securities fetched average rates of 5.283 percent, 5.61 percent and 5.77 percent, respectively.
In comparison, the Bloomberg Valuation (BVAL) Service rates are 5.279 percent for the three-month tenor, 5.612 percent for the six-month tenor and 5.784 percent for the one-year tenor.
The previous rates were 5.329 percent, 5.672 percent and 5.754 percent for the 91-day, 182-day and 364-day treasury bills, respectively.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said via email that the Treasury bill average auction yields were mostly lower, though slightly, after rising for three straight weeks, ahead of the release of the local inflation data. The consumer price index for February is expected to ease from 2.9 percent in January 2025.
Ricafort said global crude oil prices recently lingered among two-month lows and also among three-year lows, or since December 2021, which could support relatively benign inflation that could support future monetary easing/rate cuts.
That somehow influenced the T-bill auction results, Ricafort said.
“T-bill auction yields are now again slightly lower versus the comparable short-term BVAL yields, which are among the lowest in three months,” he said.
Michael Gerard Enriquez, Sun Life Investment Management Trust Corp., said in a Viber message that there were more maturities for reinvestment, providing a higher demand for the Treasury bills auction.
“This higher demand has caused rates to be slightly lower in the auction,” he said.
Meanwhile, John Paolo Rivera, Philippine Institute for Development Studies senior research fellow, said banks and institutional investors have ample liquidity and are looking for short-term placements like government securities, which remain a safe haven amid global uncertainties.
“The slightly lower rates for shorter tenors indicate that the market may be anticipating potential rate cuts by the BSP later this 2025, or at least a more stable interest rate environment. Investors may prefer locking in rates before further movements in policy rates,” Rivera said.
“With geopolitical risks, inflation concerns, and uncertainty in global markets, investors may be shifting to safer, short-term assets rather than committing to longer-term instruments,” he added.
Rivera also said that the BTr may have timed the auction well, as demand for short-term instruments remains strong, allowing the government to borrow at favorable rates.
