T-bill rates fall as investors lock in yields
Investors rushed into the government’s latest sale of Treasury bills (T-bills) on Monday, snapping up short-dated securities as they scramble to lock in yields before interest rates drift lower.
This allowed the government to fully raise its target amount of P25 billion via T-bills.
Auction results showed the issuance was met with unusually strong demand, attracting P156.4 billion in total tenders. That was 6.3 times bigger than the original size of the offering.
Apart from the robust investor appetite for the debt paper, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the market was still holding onto hopes of further easing this year.
Signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. and Finance Secretary Ralph Recto of another quarter-point rate cut before year’s end “led more investors to lock in yields before they go down further in the coming months,” Ricafort said.
The Treasury said the 91-day T-bill fetched an average rate of 5.046 percent, cheaper than the preceding auction’s 5.173 percent.
The average rate for the 182-day debt paper also fell to 5.222 percent, from 5.323 percent previously.
Lastly, creditors asked for an average yield of 5.376 percent for the 364-day T-bill, down from 5.457 percent seen in the last offering.
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.
