Less hawkish central bank tempers T-bill rates

MANILA, Philippines — Rates for short-term debt paper fell for the fourth straight week during Monday’s sale of Treasury bills (T-bills) after the Bangko Sentral ng Pilipinas (BSP) sounded less hawkish and hinted at a rate cut in August.

This, in turn, allowed the government to raise its target financing of P15 billion via T-bills, the Bureau of the Treasury (BTr) said.

Auction results showed total demand for the debt securities amounted to P59.3 billion, four times larger than the original size of the issuance.

READ: T-bill rates dip

Apart from the robust appetite from investors, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the reduced hawkishness of the BSP also helped bring down borrowing costs for the government.

Borrowing program

“Treasury bill average auction yields were again slightly lower for the fourth straight week after less hawkish signals from BSP Governor Eli Remolona Jr. on possible -0.25 local rate cut as early as August and another -0.25 later in 2024,” Ricafort said.

The average yield for the 91-day T-bill fell to 5.712 percent, from 5.727 percent in the previous week. Meanwhile, the 182-day notes fetched a rate of 5.864 percent, cheaper than 5.893 percent seen in the last auction.

Lastly, interest charged on the 364-day T-bill stood at 6.007 percent, lower than 6.037 last week.

READ: Marcos admin to borrow P585B from local creditors in Q2

The Marcos administration is planning to borrow P585 billion from local creditors in the second quarter of 2024—the same as the financing program in the first quarter. Under the plan, the government is targeting to raise P195 billion via T-bills and P390 billion via Treasury bonds.

Overall, the Department of Finance had announced a bigger borrowing plan for this year at P2.57 trillion—from the old program of P2.46 trillion—as the government raises funds to plug a bigger-than-previously-expected budget hole of P1.5 trillion. —Ian Nicolas P. Cigaral INQ