Yields on Treasury bills (T-bills) rose for the third consecutive week on Monday, as the Bangko Sentral ng Pilipinas (BSP) ruled out a more aggressive monetary easing for now.
The Bureau of the Treasury was able to borrow its target amount of P20 billion as the total bids reached P55.1 billion, exceeding the original offer size by nearly three times.
Auction results showed that the three-month T-bill fetched an average yield of 5.463 percent, much higher than the 5.444 percent in the previous auction. The rate for the 182-day paper also went up to 5.731 percent, from 5.668 percent.
Creditors obtained an average yield of 5.686 percent for the one-year debt paper, up from last week’s 5.623 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that T-bill rates were bottoming out after steep declines for the past two weeks.
“Local rate cut (last week) of at least 25 basis points (bps) was already priced in beforehand. Thus, further rate cuts by the US Fed and the BSP would lead to lower T-bill average auction yields eventually, consistent with a healthy yield curve,” Ricafort told Inquirer.
Last week, the BSP’s Monetary Board slashed benchmark interest rates by 25 bps for a second straight meeting, bringing its policy rate to 6 percent.
BSP Governor Eli Remolona Jr. also hinted of additional easing moves this year until next year while aiming for a “measured” shift to a less restrictive monetary policy.
Remolona said that a 25-bp cut at the Dec.19 policy meeting would be “possible,” but a larger half-point cut “unlikely.”
Similarly, Dino Angelo Aquino, vice president and head of fixed income at Security Bank Corp., noted that limited movement was anticipated, as the market has already factored in the recent rate cut.
“[It’s] more of a nonevent given the light economic data over the next few days,” he said.
The government plans to raise P145 billion from the domestic market in October, of which P100 billion will come from T-bills and P45 billion from T-bonds.