The Bureau of the Treasury (BTr) held its treasury bills auction on Monday, and it ended with mixed results as the government partially awarded the 91-day paper while granting full awards to the remaining two tenors.
In a statement, the BTr said the auction attracted total tenders of P45.7 billion or 1.8 times oversubscribed.
With the decision to make a partial award for the three-month IOU, the BTr raised P24.2 billion for the three tenors, compared to the P25 billion total offering.
The BTr said the 91-day securities were capped at 5.307 percent, given lagging demand and the wide dispersion of submitted bids, which reached higher than those of the longer tenor treasury bills.
The previous comparable rate and the Bloomberg Valuation (BVAL) Service rate were lower at 5.157 percent and 5.2978 percent, respectively.
Tenders for the three-month paper amounted to P12.335 billion, with the BTr partially awarding P7.15 billion versus the P8 billion program.
Meanwhile, the 182- and 364-day treasury bills had average rates of 5.646 percent and 5.748 percent, respectively.
The previous rate for the 182-day IOU was 5.554 percent, while the BVAL rate was recorded at 5.6163 percent.
The government awarded P8 billion as programmed for the half-year paper, with demand reaching P17 billion.
The comparable previous rate for the one-year tenor was 5.681 percent, while the BVAL reference rate was 5.7763 percent.
The BTr awarded P9 billion as planned, with tenders reaching P16.332 billion.
John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said that the mixed results, particularly the partial award for the 91-day tenor, reflect a combination of market sentiment, interest rate expectations, and liquidity conditions.
“The 91-day T-bill saw a higher rate than its previous auction and above the BVAL reference rate, indicating that investors demanded higher yields for short-term placements. The government’s decision to partially award the 91-day paper suggests a reluctance to accept significantly higher borrowing costs amid expectations of rate cuts later in the year,” Rivera said.
“The full awards for the 182-day and 364-day T-bills, despite their higher rates, indicate that the government was more willing to lock in rates for longer tenors, potentially to hedge against future rate volatility,” he added.
Rivera said investors may also be shifting preferences toward other instruments offering better yields, such as corporate bonds or even term deposits, given expectations of sustained higher rates in the near term.
“The Fed’s cautious stance on rate cuts may be influencing investors to demand higher yields for shorter-dated securities as they assess potential shifts in monetary policy,” Rivera said.
“While Philippine inflation remains within the target range, persistent energy and food price risks could be making investors more cautious, leading them to ask for higher premiums on shorter-term instruments,” he added.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said the lower demand for the T-bills could partly be attributed to preparations for the annual tax payments and filings ahead of the Bureau of Internal Revenue’s April 15, 2025 deadline, “a consistent pattern seen for many years for the seasonal increase in tax payments, as well as ahead of the Holy Week holiday preparations.”
“The latest Treasury bill average auction yields again mostly corrected slightly higher for the second straight week, after slightly declining for three straight weeks… amid some continued market concerns over Trump’s tariff threats/ reciprocal tariffs on April 2, 2025, that could lead to slower US economic growth and higher US inflation, or stagflation that could potentially lead to fewer Fed rate cuts,” Ricafort also said.
