T-bill rates down amid rate cut hopes
Yields on short-dated local debts fell again during Monday’s sale of Treasury bills (T-bills), after last week’s data that showed a mild inflation uptick in December boosted the case for more rate cuts this year.
This then caused debtors to chase current yields, allowing the Bureau of the Treasury (BTr) to be more selective and issue the paper at lower rates.
Auction results showed the BTr was able to raise P27.6 billion via T-bills, exceeding the initial offer of P22 billion.
The BTr said there was strong demand for the debt paper, which were oversubscribed by 4.3 times after attracting total bids amounting to P93.8 billion.
That, in turn, prompted the Treasury to double the accepted noncompetitive bids for the three and six-month T-bills to P5.6 billion each.
At the same time, the government was able to borrow from local creditors at a cheaper cost.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said T-bill rates fell for the second straight week amid hopes of continued monetary policy easing.
“Treasury bill average auction yields mostly corrected as the latest inflation rate of 2.9 percent in December 2024 was still relatively benign and well within the Bangko Sentral ng Pilipinas’ (BSP) inflation target, which could justify future local policy rate cuts,” Ricafort said.
The BTr said the 91-day T-bill fetched an average rate of 5.588 percent, lower than the 5.782 percent recorded in the previous auction.
Lenders likewise asked for an average yield of 5.638 percent for the 182-day debt securities, cheaper than the 5.911 percent before.
Lastly, the average rate for the 364-day T-bill stood at 5.891 percent, down from 5.931 percent posted last week.
For this year, the Marcos administration aims 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.
