The Bureau of the Treasury (BTr) fully awarded bids for Treasury bills at Monday’s auction, marked by brisk demand for short-term IOUs.
The auction was 3.1 times oversubscribed, attracting P78.4 billion in total tenders.
The BTr raised the full program of P25 billion for the auction.
The 91-, 182-, and 364-day securities fetched average rates of 5.515 percent, 5.612 percent, and 5.702 percent, respectively.
The first two tenors saw lower rates than last week’s 5.546 percent for the three-month paper and 5.65 percent for the six-month IOU. The one-year security, however, saw a higher rate during this week’s auction, compared with the previous figure of 5.655 percent.
The comparable Bloomberg Valuation Service rates are 5.513 percent, 5.626 percent, and 5.7 percent for the three-month, half-year, and one-year tenors, respectively.
“The drop in the 91-day and 182-day yields reflects continued investor interest in short-term debt amid expectations that domestic policy rates may be cut soon, especially after the BSP signaled a dovish stance,” John Paolo Rivera, a senior research fellow at the Philippine Institute for Development Studies, said.
“In contrast, the slight uptick in the 364-day rate could be due to portfolio rebalancing or positioning ahead of further inflation and growth data, with investors demanding slightly higher returns for locking in funds longer,” he added.
Meanwhile, the more than four-times oversubscription for the 182-day securities, in particular, likely reflects a sweet spot where investors are seeking better yields than the 91-day but without the longer commitment of the one-year paper, Rivera said.
“It also suggests that investors see limited risk in the medium term and are capitalizing on relatively stable macro conditions while hedging against potential volatility later in the year,” he explained.
Reinielle Matt Erece, economist at Oikonomia Advisory & Research Inc., said “Lower bond yields reflect the expected monetary policy easing path, wherein previous rate cuts and future rate cuts may have influenced yield movements.”
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said increased demand for the short-term IOUs could indicate that investors were locking in relatively higher yields before any further cut in BSP rates, which he said may be possible as early as June 19.
