T-bill rates mostly rise anew as Middle East worries trump BSP rate cut
Treasury Bills auction results, June 23, 2025
MANILA, Philippines — The Marcos administration borrowed at much higher costs locally during Monday’s sale of Treasury bills (T-bills).
This happened as the tensions in the Middle East and the risks to inflation they bring overshadowed the additional interest rate cuts that the Bangko Sentral ng Pilipinas (BSP) announced last week.
In turn, this prevented the Bureau of the Treasury (BTr) from fully raising its target amount from T-bills.
READ: Treasury bill rates mostly up
Auction results showed the BTr borrowed P24.6 billion via short-dated debt paper, falling short of the P25-billion goal.
The offering attracted P65.5 billion in total bids, exceeding the original size by 2.6 times.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said yields still went up despite the oversubscription as the ongoing war in the Middle East frayed investor nerves.
“The Treasury bill average auction yields were mostly slightly higher for the second straight week despite the latest BSP rate cut, largely due to the recent Israel-Iran war,” Ricafort said.
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The 91-day T-bill fetched an average rate of 5.53 percent, higher than the 5.459 percent seen in the previous auction.
Meanwhile, local creditors asked for an average yield of 5.557 percent for the six-month debt note, up from last week’s 5.523 percent.
The average rate for the 364-day T-bill fell to 5.655 percent, from 5.657 previously.
T-bill proceeds to help fill budget gap
For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget gap amounting to P1.54 trillion. This is 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 planned to be raised domestically. Of this, P60 billion will be via T-bills and P1.98 trillion via longer-dated Treasury bonds.
/rwd
