Hopes of further rate cut pushed down T-bill rates
Yields on short-dated government debts fell again during Monday’s sale of Treasury bills (T-bills), driven by continued hopes for further easing amid dovish signals from Philippine officials.
Auction results showed the Bureau of the Treasury raised P25 billion via T-bills, as targeted.
The offering attracted P117.8 billion in total bids, exceeding the original size of the issuance by 4.7 times.
Beyond healthy demand, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said yield went down amid expectations of further cuts to the policy rate of the Bangko Sentral ng Pilipinas (BSP).
“Treasury bill average auction yields were again mostly slightly lower for the 12th straight week … amid more dovish signals recently from Finance Secretary [Ralph] Recto, who signaled that the BSP might cut rates,” he said in a market commentary.
“T-bill average auction yields also eased anew after the US Federal Reserve’s signals of another two rate cuts for the rest of 2025 … as these future Fed rate cuts could be matched locally by the BSP,” he added.
Across the board
The Treasury said the 90-day debt paper fetched an average yield of 4.883 percent, less costly than the previous auction’s 4.95 percent.
The average yield for the 182-day T-bill stood at 5.081 percent, lower than 5.148 percent before.
Lastly, investors asked for an average yield of 5.195 percent for the 364-day debt note, down from 5.272 percent previously.
This year, the government plans to borrow P2.6 trillion from lenders to plug a projected budget deficit of P1.6 trillion. This is 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. This is a distinction it hopes to achieve by keeping debt metrics in check while sustaining economic growth.
