T-bill auction yields mixed results
Yields on Treasury bills (T-bills) ended mixed during the Monday auction that saw market players aiming to secure longer-dated paper in anticipation of further policy rate cuts.
Broken down, the 91-day T-bill rate averaged 5.605 percent, up from last week’s 5.586 percent. The 182-day paper, on the other hand, fetched an average yield of 5.5735 percent, cheaper compared to the 5.752 percent recorded previously.
Meanwhile, the rate for the 364-day T-bill averaged 5.786 percent, rising from the previous auction’s 5.751 percent.
READ: BSP delivers 25-bp rate cut; more to come
The Bureau of the Treasury (BTr) was able to borrow its target amount of P20 billion via T-bills as total bids reached P69.9 billion, exceeding the original size by 3.5 times.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said that the strong demand for the 182-day T-bill pushed the auction yield down, as investors submitted bids totaling P26.065 billion—far exceeding the P6.5 billion offered.
Article continues after this advertisementHe added that many investors are taking advantage of these relatively high yields in anticipation of potential interest rate cuts by the Federal Reserve from 2024 to 2026, which would likely be mirrored by the Bangko Sentral ng Pilipinas (BSP).
Article continues after this advertisement25-bp cut
BSP Governor Eli Remolona Jr. stated earlier that a 25-basis-point (bp) cut at the Dec. 19 meeting was “possible.” However, he noted that a larger half-point reduction is “unlikely.”
According to a Reuters report, US Federal Reserve policymakers are nearly certain to lower short-term borrowing costs by a modest quarter of a percentage point at their Nov. 7 policy meeting and another quarter next month.
They expressed confidence that while the labor market is slowing, it is not collapsing, despite new data showing that US employers added fewer jobs in October than in any month since December 2020.
The Marcos administration aims to raise about P90 billion from the domestic market this month of which P60 billion will come from T-bills and P30 billion from Treasury bonds. INQ
