T-bills up on rate cut hopes

MANILA, Philippines — The government borrowed P20 billion in short-term securities despite slightly higher rates as investors anticipate policy easing next month.

The Bureau of the Treasury yesterday fully awarded the entire P20 billion of T-bills on offer.

Yields for the three tenors were mixed in reference to the secondary market but were higher versus last week’s rate.

Rates for the 91-day offer moved upward by 0.7 basis points to 5.743 percent from 5.736 percent in the secondary market and also up from last week’s 5.717 percent.

Yields averaged 5.991 percent for the 182-day T-bills, 3.1 basis points below the secondary rate but up from last week’s 5.978 percent.

The 364-day short-dated debt papers saw rates at 6.081 percent, lower by 2.4 basis points from the reference rate of 6.105 percent but above last week’s level of 6.072 percent.

The Treasury awarded P6.5 billion each for the 91- and 182-day offer and P7 billion for the one-year tenor.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said investors are locking in longer-term tenors ahead of a possible rate cut next month.

The Bangko Sentral ng Pilipinas already signaled a likely 25-basis-point reduction in key interest rates during its policy meeting in August.

Another similar magnitude of reduction is also seen by the fourth quarter of the year.

“This is also due to more dovish signals by US Federal Reserve officials recently,” Ricafort said.

Meanwhile, T-bill demand inched up by 1.36 percent week-on-week to reach P47.372 billion. The auction was oversubscribed by 2.37 times.

Bids also went up to P17.502 billion for the one-year offer, but down to P14.86 billion and P15.01 billion for three and six months, respectively.

For this month, the Treasury aims to borrow P215 billion from local creditors.

Of this, P100 billion is expected to come from short-dated T-bills. It has so far raised P82.6 billion.