GOVERNMENT does a The full award of Treasury bills (T-bills) was issued on Monday even as yields rose slightly as investors’ expectations of a rate cut were fully priced in.
The Bureau of the Treasury (BTr) collected P15 billion as scheduled from the bonds issued on Monday as the total bills reached P46.74 billion, three times the amount sold. However, this was lower than the P56.463 billion of tenders seen last week.
When it was over, the Department of Finance borrowed a scheduled P5 billion in 91-day T-bills as the tenor tenders reached P15.999 billion. The three-month paper was quoted at an average rate of 5.818%, up 4.4 basis points (bps) from 5.774% seen last week, with the bid-asked yield ranging from 5.7% to 5.84%.
The government likewise made a full P5-billion bond award for 182 days, with bids totaling P15.041 billion. The average six-month T-bill rate stood at 5.975%, up 5.3 bps from 5.922% fetched last week, with interest rates ranging from 5.9% to 5.99%.
Finally, the Department of Finance raised P5 billion as planned in 364-day credit notes as the tenor requirement reached P15.7 billion. The one-year debt ratio increased by 0.9 bp to 5.977% from 5.968% quoted last time, with tenders accepted at rates from 5.95% to 5.98%.
In the secondary market before the auction, T-91-, 182-, and 364-day bills were quoted at 5.8404%, 6.0571%, and 6.0739%, respectively, based on PHP Bloomberg Valuation Service (BVAL) data provided. by the Treasurer.
The government fully paid its T-bill offering as the yield fetched was “lower than prevailing secondary market rates,” the Finance Ministry said in a statement.
T-bill yields were “comparatively higher” than those fetched in the previous auction as the market has already priced in the Bangko Sentral ng Pilipinas (BSP) policy meeting this week, a trader said by phone.
The market also expects the BSP to be hawkish in the first half of 2025 amid uncertainty, the trader added, although its easing cycle is likely to continue next year.
“Treasury bill auction rate is again slightly higher for the 11th consecutive week, similar to the small weekly increase in the short-term PHP BVAL yield, despite the much-expected Federal Reserve rate cut and BSP rate cut, among some payments. year-end funds as the accounting year approaches due to balance sheet management,” Rizal Commercial Banking Corp. Chief Financial Officer Michael L. Ricafort said in a Viber message.
Still, T-bill rates have “normalized” and are now close to the same BVAL rates, he added.
The Fed will hold its final policy review of the year on Dec. 17-18. Markets widely expect another 25-bp cut at this week’s meeting.
The US central bank began its easing cycle in September with a 50-bp cut and followed it up with a 25-bp cut in its November policy, bringing the fed funds rate to a range of 4.5%-4.75%.
Meanwhile, the BSP will meet to discuss the policy on December 19 (Thursday). A BusinessWorld a survey conducted last week showed that 13 out of 16 analysts expect the Monetary Board to cut the benchmark borrowing costs by 25 bps for the third straight meeting, which would bring the policy rate to 5.75%.
The BSP started its rate-cutting cycle in August with a 25-bp cut. It cut borrowing costs by another 25 bps in October to bring the target repurchase rate to 6%.
Monday’s T-bill auction was the last home loan offering of the year. The government raised P1.97 trillion in the domestic market this year, under its P2.11-trillion home loan program.
The government is borrowing to help fund its budget deficit, which stands at P1.52 trillion or 5.7% of gross domestic product this year. – AMC Sy
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