T-bill rates fell during first 2025 debt offering

INQUIRER FILE PHOTO

The government was able to raise its planned amount of short-dated local debts during its first sale of Treasury bills (T-bills) for this year amid robust demand from creditors, which helped lower borrowing costs.

Auction results showed the Bureau of the Treasury (BTr) sold P22 billion in T-bills, as planned, during Monday’s offering.

The debt papers were met with “healthy” demand from lenders. The T-bills attracted total bids amounting to P71 billion, exceeding the original size of the offering by 3.2 times.

READ: T-bill rates rise ahead of BSP policy meeting

That, in turn, translated to cheaper yields sought by investors. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said T-bill rates “corrected slightly lower” amid expectations of benign inflation in December.

The Philippine Statistics Authority will release the latest inflation data today. An Inquirer survey of 11 analysts yielded a median estimate of 2.7 percent for December inflation, settling within the 2.3 to 3.1 percent forecast range of the central bank for last month.

“The latest local inflation data is expected to slightly pick up from 2.5 percent in November 2024, but still considered relatively benign and within the Bangko Sentral ng Pilipinas target of 2 to 4 percent,” Ricafort said.

The BTr said the average yield for the three-month debt papers stood at 5.782 percent, lower than the 5.818 percent recorded in the previous auction.

The 182-day T-bill, meanwhile, fetched a rate of 5.911 percent, cheaper than the 5.975 percent before.

Lastly, the average rate sought by creditors for the 1-year debt securities was 5.931 percent, down from 5.977 percent before.

For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget hole amounting to P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product.

By sources of financing, the government will borrow P507.41 billion from foreign investors in 2025.

The remaining P2.04 trillion is targeted to be raised domestically, of which P60 billion will be via T-bills and P1.98 trillion via Treasury bonds. All of this, in turn, is expected to push the government’s outstanding debt to P17.35 trillion by the end of 2025.

According to Finance Secretary Recto, the government wants to eventually lessen the share of foreign borrowings to 10 percent—from the current level of around 25 percent—to minimize foreign exchange risks that can bloat the peso value of external debts.

But the finance chief said this fiscal goal would not be achieved within the term of President Ferdinand Marcos Jr., adding that the government will be diversifying its sources of external financing to lock in cheaper rates as much as possible.