BTr hikes T-bill award as yields on all tenors drop

THE GOVERNMENT upsized its award of the Treasury bills (T-bills) it offered on Monday as rates dropped across the board amid strong demand for safer assets amid the peso’s weakness and geopolitical concerns.

The Bureau of the Treasury (BTr) raised P37.8 billion via the T-bills it auctioned off, higher than the P27-billion plan as the offer was nearly five times oversubscribed, with total tenders reaching P126.59 billion. This was also above the P113.096 billion in bids recorded last week.

The Auction Committee doubled its acceptance of noncompetitive bids for all tenors to P7.2 billion each amid the high volume of tenders and as all tenors fetched average yields that were lower than those seen at the previous week’s auction and the secondary market, the Treasury said in a statement.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P35.65 billion. The three-month paper fetched an average rate of 4.723%, inching down by 0.8 basis point (bp) from 4.731% last week. Yields accepted ranged from 4.68% to 4.743%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P45.85 billion. The average rate of the six-month T-bill was at 4.817%, easing by 3.3 bps from 4.85% previously. Tenders awarded carried yields from 4.8% to 4.835%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan, as bids totaled P45.09 billion. The one-year paper’s average yield was at 4.888%, down by 2.8 bps from 4.916% last week. Accepted rates were from 4.875% to 4.893%.

At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 4.7975%, 4.8811%, and 4.9428%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

“Yields continue to fall, moving lower week on week. All noncompetitive bids were doubled. Bids ranged from 3.96- 5.09 times the offer size. The increase in demand seemed to carry over from last week, likely from the weakening peso and the various geopolitical conflicts and events that took place over the weekend,” a trader said in a text message.

The peso sank to a new record low of P59.46 against the dollar on Jan. 15. It has been trading at the P59 level for most of the month amid a strong dollar, evolving monetary policy expectations here and in the United States, concerns over the US Federal Reserve’s independence, and geopolitical tensions abroad.

Meanwhile, stock markets slid in Asia on Monday after US President Donald J. Trump threatened to slap extra tariffs on eight European nations until the US was allowed to buy Greenland, pushing the dollar down against the safe-haven yen and Swiss franc.

Mr. Trump said he would impose additional 10% import levies from Feb. 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25% on June 1 if no deal was reached.

Major European Union states condemned the tariff threats over Greenland as blackmail, and France proposed responding with a range of previously untested economic countermeasures.

Bets on a potential rate cut by the Bangko Sentral ng Pilipinas (BSP) next month continued to pull T-bill yields down, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Monetary Board will hold its first policy review for this year on Feb. 19. It has so far slashed benchmark borrowing costs by 200 bps since it began its easing cycle in August 2024, bringing the policy rate to an over three-year low of 4.5%.

BSP Governor Eli M. Remolona, Jr. said earlier this month that they could consider another  reduction next month, but noted that the policy rate is already “very close” to where they want it to be, signaling a nearing end to this current rate cut round.

Expectations that the Fed could pause this month also affected yield movements, Mr. Ricafort added.

Economists expect the Fed will keep its benchmark overnight interest rate in the 3.5%-3.75% range at its Jan. 27-28 meeting, but reductions in borrowing costs are anticipated this year to safeguard the labor market, Reuters reported.

Data released last week showed inflation pressures were stable in December, but consumers faced higher food prices and rents.

On Tuesday, the government will offer P30 billion in reissued 20-year Treasury bonds (T-bonds) with a remaining life of seven years and two months.

The Treasury wants to raise P180 billion from the domestic market this month, or P110 billion via T-bills and P70 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.647 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy with Reuters