T-bill, bond rates may drop on BSP easing hopes

RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could decline as weak gross domestic product (GDP) data increased expectations of further policy easing by the central bank.   

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 seven-year T-bonds with a remaining life of four years and 11 months.

T-bill and bond rates could mirror the week-on-week drop in comparable secondary market yields as weaker-than-expected fourth-quarter and full-year 2025 GDP growth heightened the odds of a sixth straight cut from the Bangko Sentral ng Pilipinas (BSP) this month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Expect bullish momentum to translate into [this] week as players price in a poor (economic) outlook,” a trader said in an e-mail.

At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills went down by 8.38 basis points (bps), 6.34 bps, and 5 bps week on week to 4.6826%, 4.7725%, and 4.8412%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 30 published on the Philippine Dealing System’s website.

Meanwhile, the seven-year bond’s yield eased by 8.19 bps week on week to close at 5.8549%, while the five-year debt, the tenor closest to the T-bond’s remaining life, fell by 11.05 bps to fetch 5.6551%.

Philippine GDP growth slowed to 3% in the fourth quarter of 2025 from 5.3% in the same period a year prior and 3.9% in the third quarter. This brought the full-year average to 4.4%, well below the government’s 5.5%-6.5% goal.

Analysts said that the weak GDP report could prompt the BSP to cut rates further to boost domestic demand. The Monetary Board will hold its first policy meeting for this year on Feb. 19.

Last week, the government raised P37.8 billion via the T-bills, higher than the P27-billion plan as the offer was oversubscribed, with total tenders reaching P155.975 billion.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion program, as demand reached P40.1 billion. The three-month paper fetched an average rate of 4.666%, down by 5.7 bps from the previous week. Yields accepted ranged from 4.64% to 4.673%.

The Treasury also borrowed P12.6 billion via the 182-day debt as tenders hit P57.55 billion. The average rate of the six-month T-bill was at 4.751%, easing by 6.6 bps. Tenders awarded carried yields from 4.73% to 4.763%.

Lastly, the BTr raised P12.6 billion from the 364-day securities as bids totaled P58.325 billion. The one-year paper’s average yield was at 4.827%, falling by 6.1 bps. Accepted rates were from 4.81% to 4.843%.

Meanwhile, the reissued seven-year T-bonds to be offered on Tuesday were last sold on Jan. 13, where the government borrowed P40 billion versus the P30-billion plan as it opened its tap facility. The reissued bonds fetched an average rate of 5.71%, below the 6.125% coupon rate.  

The government aims to raise P308 billion from the domestic market this month, or P108 billion via T-bills and up to P200 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