RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week could decline further after the Bangko Sentral ng Pilipinas (BSP) cut borrowing costs and signaled that they are nearing the end of their current easing cycle.
The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday, or P8.5 billion each in 91-day and 182-day securities, and P8 billion in 364-day papers.
On Tuesday, the government will offer P30 billion in reissued 10-year T-bonds with a remaining life of seven years and 13 days.
T-bill and T-bond auction yields could go down in line with the broad week-on-week drop in secondary market rates after BSP Governor Eli M. Remolona, Jr. said they could opt to keep benchmark borrowing costs steady after their latest cut, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“BSP Governor Remolona gave less dovish signals on a possible one 25-basis-point (bp) rate cut for the rest of 2025 if economic data remained weak, or even no more rate cut for the rest of 2025 if the economic data remained the same,” he said.
Mr. Ricafort added that the market will monitor the August inflation data to be released on Friday as this could justify further reductions from the BSP.
A trader said in an e-mail that the reissued 10-year bond could fetch rates ranging from 5.875% to 5.925%.
At the secondary market on Friday, the 91-, 182-, and 364- day T-bills went down by 2.57 bps, 9.09 bps, and 6.28 bps week on week to end at 5.2321%, 5.3921%, and 5.5357%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Aug. 29 published on the Philippine Dealing System’s website.
For its part, the 10-year bond rose by 1.6 bps week on week to yield 6.016%, while the seven-year tenor, the closest to the remaining life of the reissued papers on offer this week, went down by 2.1 bps to close at 5.9011%.
The BSP on Thursday lowered benchmark interest rates by 25 bps for the third consecutive meeting to bring the policy rate to 5%, as expected by all 20 analysts in a BusinessWorld poll.
It has now slashed borrowing costs by a cumulative 150 bps since it began its rate-cut cycle in August 2024.
Mr. Remolona said the key rate is now at the “sweet spot” in terms of inflation and output, but he left the door open for one more cut this year, which would likely mark the end of the central bank’s current easing cycle.
The Monetary Board’s last two meetings this year are scheduled for Oct. 9 and Dec. 11.
Last week, the government raised P25 billion as planned from the T-bills it auctioned off as the offer was more than four times oversubscribed, with total bids reaching P113.02 billion.
Broken down, the Treasury borrowed P8 billion as planned via the 91-day T-bills as total tenders for the tenor reached P31.89 billion. The three-month paper was quoted at an average rate of 5.195%, down by 3.9 bps from the previous auction. Accepted yields ranged from 5.188% to 5.2%.
The government likewise raised the programmed P8 billion from the 182-day securities as tenders amounted to P39.27 billion. The average rate of the six-month T-bill was at 5.398%, dropping by 3.7 bps, with accepted rates ranging from 5.388% to 5.413%.
Lastly, the Treasury sold the planned P9 billion in 364-day debt as demand for the tenor totaled P41.86 billion. The average rate of the one-year T-bill went down by 4.2 bps to 5.522%. Tenders accepted carried yields of 5.518% to 5.53%.
Meanwhile, the reissued 10-year T-bonds to be offered on Tuesday were last auctioned off on July 8, where the government raised P30 billion as planned at an average rate of 6.128%, below the 6.75% coupon rate.
The Treasury is looking to raise P220 billion from the domestic market this month, or P100 billion via T-bills and P120 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.56 trillion or 5.5% of gross domestic product this year. — Aaron Michael C. Sy