THE GOVERNMENT made a partial award of the short-term debt it offered on Monday at higher yields amid market expectations of a fourth straight hike by the Bangko Sentral ng Pilipinas (BSP) this week.
The Bureau of the Treasury (BTr) raised a combined P54.23 billion from its offering of cash management bills (CMBs) and Treasury bills (T-bills), just short of the P55-billion plan despite total tenders reaching P92.212 billion.
The demand was higher than the P61.232 billion in bids seen last week for a P45-billion offer, which did not include CMBs.
Broken down, the Treasury borrowed P10 billion as planned via the 35-day cash management bills as bids reached P23.012 billion.
The one-month bill fetched an average rate of 5.278%, up by 4.9 basis points (bps) from the 5.229% seen for the last award on Oct. 5. Accepted bid yields were from 5.2% to 5.339%.
Meanwhile, the government raised just P44.23 billion from the T-bills, a tad below the P45-billion target, even as tenders reached P69.2 billion.
“The T-bill auction attracted strong investor demand…,” the BTr said in a statement.
For the 91-day debt, the government awarded the programmed P20 billion as bids for the tenor reached P28.48 billion. The three-month paper fetched an average rate of 5.992%, jumping by 14.7 bps from 5.845% last week. Tenders accepted had yields from 5.825% to 6.14%.
The BTr also raised P15 billion as planned via the 182-day T-bills as tenders hit P24.48 billion. The average yield on the six-month T-bill was at 6.229%, climbing by 5.8 bps from 6.171% previously. Bid rates awarded were from 5.825% to 6.14%.
Meanwhile, the Treasury sold just P9.23 billion in 364-day securities, below the P10-billion plan even as demand reached P12.72 billion. The one-year paper fetched an average rate of 6.444%, up by 9.3 bps from 6.351% last week. Accepted yields ranged from 6.25% to 6.5%.
At the secondary market before Monday’s auction, the 35-, 91-, 182-, and 364-day bills were quoted at 5.3198%, 5.6764%, 6.0671%, and 6.3193%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data from the Treasury.
“The government securities market was dead quiet the whole day. Bids were higher by around 5-10 bps as players stayed on the sidelines… The BSP rate decision comes on Thursday, where it is widely expected to hike rates by 25 bps,” a trader said in an e-mail.
Yields on the short-term bills went up across all tenors ahead of an expected rate hike by the Philippine central bank on Thursday, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The BSP is widely expected to deliver a fourth straight hike this week amid heightened inflation pressures, with further upside risks to prices threatening to de-anchor expectations, analysts said.
A BusinessWorld poll showed 20 of 22 analysts expect the Monetary Board to raise benchmark rates by 25 bps for a fourth consecutive meeting on Thursday, which would bring the policy rate to 5.25%.
This would match the benchmark rate set in June 2025 and will be the highest in one-and-a-half years since the 5.5% in April 2025.
On the other hand, two analysts priced in a 50-bp rate hike this week, saying that a more aggressive move could prevent the BSP from falling behind the curve.
The central bank has already hiked key borrowing costs by a total of 75 bps since April.
Meanwhile, the trader said demand for the reissued 20-year Treasury bonds (T-bonds) to be offered on Tuesday will likely be weak, with the issue seen fetching rates ranging from 7.75% to 7.825%. The government is looking to borrow P30 billion via the papers that have a remaining life of four years and nine months.
The BTr wants to raise P418 billion from the domestic market this month, or P168 billion in T-bills and P250 billion in T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year. — Aaron Michael C. Sy