Treasury bill rates down again

MANILA, Philippines – Yields on short-term local debts of the government mostly fell for the second straight week during Monday’s sale of Treasury bills (T-bills) as lower global oil prices fueled expectations of tame inflation, which can support more interest rate cuts.

That, in turn, allowed the Bureau of the Treasury (BTr) to upsize its T-bills offering, raising a total of P30.8 billion against the original plan to borrow P22 billion.

READ: T-bill rates trend lower

Auction results showed the debt paper attracted P90.6 billion in total tenders, exceeding the original size of the offering by 4.1 times.

But beyond the strong demand, Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said declining prices of oil in the international market were fanning investors’ hope for more interest rate cuts as inflation stays benign.

“The latest Treasury bill average auction yields slightly corrected lower for the second straight week after global crude oil prices declined to among three-month lows, which could help further ease inflationary pressures and justify possible monetary policy easing,” Ricafort said in a market commentary.

The BTr said the 91-day T-bill fetched an average rate of 5.178 percent, cheaper than the 5.283 percent seen in the previous week.

At the same time, the average yield on 182-day debt paper stood at 5.548 percent, down from 5.610 percent before.

Lastly, creditors asked for an average yield of 5.773 percent for the 364-day debt securities, up from 5.770 percent previously.

For this year, the Marcos administration plans 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 longer-dated 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. INQ