T-bill rates ease across the board on further rate cut bets
Yields on short-term government debt slipped for the 11th straight week on Monday’s Treasury bill (T-bill) auction, as investors piled in on expectations that interest rates have further to fall.
The rush for short-dated securities reflected a scramble to lock in relatively rich returns before they decline further. As a result, the Bureau of the Treasury was able to borrow its target amount of P25 billion, auction results showed.
The offering attracted P154.2 billion in total bids. That level of demand exceeded the original size of the issuance by 6.2 times, helping drive down borrowing costs for the government.
“Treasury bill average auction yields were again mostly lower for the eleventh straight week amid the series of Bangko Sentral ng Pilipinas (BSP) rate cuts in recent months, and possible BSP and US Federal Reserve rate cuts in the coming months,” said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.
Ricafort said the expectations of additional cuts to interest rates “led more investors to lock in yields before they go down.”
Lower yields
Broken down, the 91-day T-bill fetched an average yield of 4.950 percent, down from the previous week’s 5.046 percent.
The rate on the 182-day debt paper averaged 5.148 percent, cheaper than 5.222 percent before.
Lastly, local creditors got an average yield of 5.272 percent for the 364-day T-bill, easing from 5.376 percent previously.
This year, the government plans to borrow P2.6 trillion from lenders to plug a projected budget deficit of P1.6 trillion, equivalent to 5.5 percent of gross domestic product. The drive is expected to push the debt stock to P17.36 trillion by year’s end.
Fiscal planners say they will continue to favor onshore borrowing to limit exposure to foreign exchange risks. The Marcos administration has also made clear it is seeking an upgrade to an A-level credit rating, a distinction it hopes to achieve by keeping debt metrics in check while sustaining economic growth.
