T-bill, bond rates may end mixed on BSP bets
RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be offered this week could end mixed, tracking secondary market yields, as players continue to make bets on the Bangko Sentral ng Pilipinas’ (BSP) next move amid benign inflation and a weakening economy.
The Bureau of the Treasury (BTr) will auction off P27 billion in T-bills on Monday, or P9 billion each in 91-, 182-, and 364-day papers.
On Tuesday, the government will offer P30 billion in reissued 20-year T-bonds with a remaining life of seven years and two months.
T-bill and T-bond yields could follow the mixed week-on-week movement at the secondary market on Friday as the market continues to weigh recent comments from BSP Governor Eli M. Remolona, Jr. on the Monetary Board’s policy path, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Meanwhile, a trader said in an e-mail that the T-bonds could fetch rates ranging from 5.875% to 5.925%, with the offering expected to become a test of market appetite for longer tenors.
At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills went down by 0.34 basis point (bp), 2.86 bps, and 3.18 bps week on week to end at 4.7975%, 4.8811%, and 4.9428%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 16 published on the Philippine Dealing System’s website.
Meanwhile, the 20-year bond rose by 8.32 bps week on week to yield 6.4875%, while the seven-year debt, which is the tenor closest to the remaining life of the papers on offer this week, inched up by 0.83 bp to fetch 5.8923%.
The Monetary Board will hold its first meeting for this year on Feb. 19.
The BSP on Dec. 11 delivered a fifth straight 25-bp reduction in benchmark interest rates, bringing the policy rate to an over three-year low of 4.5%.
It has lowered borrowing costs by a total of 200 bps since its rate cut cycle began in August 2024.
Mr. Remolona has left the door open to one more 25-bp cut this year that would likely mark the end of their current easing round to help boost domestic demand and spur economic recovery.
Lingering governance concerns due to a corruption scandal involving state infrastructure projects have dragged both public and private investments, causing Philippine gross domestic product growth to slump to a four-year low of 4% in the third quarter of 2025.
Analysts have said that the central bank could ease further to help prop up the economy as inflation remains under control.
Philippine headline inflation averaged 1.7% in 2025, easing from 3.2% in 2024. This was the slowest rate in nine years or since the 1.3% clip in 2016.
This was also below the BSP’s 2%-4% target but a tad higher than its full-year forecast of 1.6%.
The BSP said higher electricity costs, base effects, and a weakening peso could bring inflation back within its target band this year. The central bank expects the consumer price index to average 3.2% for 2026 and 3% in 2027.
Last week, the Treasury raised P37.8 billion via the T-bills it auctioned off, higher than the P27-billion plan, as the offer was more than four times oversubscribed, with total tenders reaching P113.096 billion. The BTr doubled its acceptance of noncompetitive bids for all tenors to P7.2 billion each.
Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P35.433 billion. The three-month paper fetched an average rate of 4.731%, decreasing by 2.4 bps from yield seen at the previous auction. Yields accepted were from 4.723 to 4.743%.
The Treasury also increased the award for the 182-day debt to P12.6 billion versus the P9-billion program as tenders hit P43.628 billion. The average rate of the six-month T-bill was at 4.85%, easing by 4.5 bps the previous week. Tenders awarded carried yields from 4.843% to 4.863%.
Lastly, the BTr raised the award for the 364-day securities to P12.6 billion from the P9-billion plan as the tenor attracted bids totaling P34.035 billion. The one-year paper’s average yield was at 4.916%, down by 2.1 bps. Accepted rates were from 4.9% to 4.928%.
Meanwhile, the reissued 20-year T-bonds to be offered on Tuesday were last auctioned off on June 29, 2021, where the government raised P35 billion as planned at an average rate of 4.187%, above the 3.625% coupon rate.
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
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