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THE BUREAU of the Treasury (BTr) fully awarded the Treasury bills (T-bills) it auctioned off on Monday with lower rates amid market expectations that the Bangko Sentral ng Pilipinas (BSP) will hold its benchmark rate steady at its Thursday meeting.

The government raised P15 billion as planned via the T-bills it auctioned off on Monday as total bids reached P46.441 billion or more than thrice the amount on offer.

Broken down, the Treasury made a full P5-billion award of the 91-day T-bills, with tenders for the tenor reaching P20.133 billion. The three-month paper was quoted at an average rate of 6.123%, 22.9 basis points (bps) below the 6.352% seen last week. Accepted rates ranged from 6.024% to 6.197%.

The government likewise borrowed the programmed P5 billion through the 182-day securities, as bids for the paper reached P10.732 billion. The average rate for the six-month T-bill stood at 6.513%, down by 2.3 bps from the 6.536% quoted last week, with accepted yields ranging from 6.45% to 6.549%.

The government also raised just P5 billion as planned via the 364-day debt papers, with bids reaching P15.576 billion. The average rate of the one-year T-bill went down by 3.1 bps to 6.56% from the 6.591% fetched last week. Accepted yields were from 6.54% to 6.585%.

At the secondary market on Monday, the 91-, 182-, and 364-day T-bills were quoted at 6.1845%, 6.4582%, and 6.5917%, respectively, based on PHP BVAL Reference Rates data published on the Philippine Dealing System’s website.

“T-bill rates fetched lower today amid expectations that the BSP will maintain its policy rates in this week’s policy meeting,” a trader likewise said in an e-mail on Monday.

A BusinessWorld poll of 18 analysts held last week showed that 15 analysts expect the Monetary Board to maintain the target reverse repurchase (RRP) rate at 6.5%, the highest in 16 years.

Meanwhile, the three remaining economists said the Monetary Board may hike policy rates by 25 bps to 6.75% at the Nov. 16 meeting.

The Monetary Board implemented an off-cycle 25-bp rate hike on Oct. 26, ahead of its scheduled meeting. It has raised interest rates by 450 bps since May 2022 to temper inflation.

Slower-than-expected inflation for October and dovish market sentiments for the US Federal Reserve both support the possibilities of a pause by the BSP, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message. 

Headline inflation for October eased to 4.9% from 6.1% in September and 7.7% in October 2022. This was also below the BSP’s 5.1-5.9% forecast for the month.

October inflation was the slowest pace in three months or since the 4.7% in July, but marked the 19th straight month that inflation breached the central bank’s 2-4% target.

Meanwhile, the Fed kept its benchmark interest rate steady at the 5.25%-5.5% range for a second straight time during its Oct. 31-Nov. 1 meeting.

It has hiked rates by a cumulative 525 bps since it began its tightening cycle in March last year.

The US central bank will next meet on Dec. 12-13 to review policy.

On Tuesday, the BTr will offer P30 billion in reissued 10-year Treasury bonds (T-bonds) with a remaining life of nine years and nine months.

The BTr plans to borrow P225 billion from the domestic market this month, or P75 billion via T-bills and P150 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 6.1% of gross domestic product this year. — Aaron Michael C. Sy

Neil Banzuelo