T-bill rates down on rate cut hopes
The euphoria over the possibility of another local policy rate cut has yet to fade and continued to drive down yields on short-term local debt notes, allowing the government to borrow more than what it had originally planned via Treasury bills (T-bills) on Monday.
Auction results showed the Bureau of the Treasury (BTr) was able to raise P27.6 billion via T-bills, higher than the initial offer of P22 billion.
The BTr said the debt securities were met with strong demand after attracting tenders amounting to P93.9 billion, 4.3 times larger than what the government had hoped to borrow. That, in turn, prompted the Treasury to double the noncompetitive bids for the three and six-month debt paper to P5.6 billion each.
But beyond demand, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the government also took advantage of the lower rates sought by creditors.
“Treasury bill average auction yields declined for the third straight week on possible local policy rate cut as early as the first BSP (Bangko Sentral ng Pilipinas) rate-setting meeting in 2025 on, as earlier signaled by most local monetary officials,” Ricafort said.
The BTr said the 91-day T-bill fetched an average rate of 5.165 percent, down from last week’s 5.588 percent.
Budget deficit
Meanwhile, creditors asked for an average rate of 5.503 percent for the 182-day debt paper, cheaper than the 5.638 percent seen in the previous auction.
Yields on the 364-day T-bill averaged 5.840 percent, lower than last week’s 5.891 percent.
For this year, the Marcos administration targets to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget hole amounting to P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product.
By sources of financing, the government will borrow P507.41 billion from foreign investors in 2025. The remaining P2.04 trillion is targeted to be raised domestically, of which P60 billion will be via T-bills and P1.98 trillion via Treasury bonds.
All of this, in turn, is expected to push the government’s outstanding debt to P17.35 trillion by the end of 2025.
