Gov’t increases T-bill award before RTB auction

THE PHILIPPINE government on Monday boosted its Treasury bill award with mostly higher rates amid strong demand before the rate-setting auction for the 30th tranche of retail Treasury bonds (RTBs) on Tuesday.

The Bureau of the Treasury (BTr) raised P17 billion from the T-bills, higher than the P15-billion

program as bids hit P49.292 billion — more than thrice the amount on the auction block.

The Treasury fully awarded P5 billion of 91-day T-bills as tenders reached P10.72 billion. The three-month debt paper was quoted at an average of 5.506%, 4.5 basis points (bps) higher than last week. Accepted rates ranged from 5.475% to 5.55%.

The bureau also raised P5 billion as planned from 182-day securities as bids hit P15.79 billion. The average rate for the six-month T-bill was 5.861%5.879%, up by 1.8 bps from last week, with accepted rates at 5.858% to 5.895%.

The BTr also borrowed P7 billion via the 364-day debt paper, higher than the P5-billion program, as demand hit P22.782 billion. The average rate of the one-year T-bill fell by 1.1 bps to 6.064% from last week. Accepted yields were 6.048% to 6.075%.

The 91-, 182- and 364-day Tbills were quoted at 5.4610%, 5.8095% and 6.0577% on the secondary market on Monday before the auction, based on PHP Bloomberg Valuation Service Reference Rates data provided by the Treasury.

Rates rose on Monday before the retail Treasury bond sale on Tuesday, which could siphon off excess peso liquidity from the financial system, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

The Treasury will hold its ratesetting auction for five-year RTBs due in 2029, from which it seeks to raise at least P30 billion.

“The higher rates continue to reflect the prospects of delayed policy rate cuts from the Bangko Sentral ng Pilipinas (BSP), while the BTr has likely opted to award larger volumes today for shortterm issuances as domestic liquidity might be diverted away from the expected flows toward the upcoming RTB-30 issuance,” a trader added in an e-mail.

BSP Governor Eli M. Remolona, Jr. earlier said the central bank is unlikely to cut rates in the first half, and there is still room to raise interest rates amid risks to inflation and robust economic growth.

The Monetary Board raised borrowing costs by 450 bps from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%. It will decide on policy on Thursday.

Fifteen of 17 analysts in a BusinessWorld poll last week expected the Monetary Board to keep the target reverse repurchase (RRP) rate at 6.5% on Thursday.