Treasury bill yields rose across all tenors at Monday’s auction as investors priced in the Bangko Sentral ng Pilipinas’ recent rate hike and the possibility of further monetary tightening.
The Bureau of the Treasury received P65.1 billion in tenders, well above its P45-billion offering, but turned selective in awarding bids, particularly for short-term securities where investors demanded higher returns.
The government awarded P16.33 billion of the P20 billion offered in 91-day Treasury bills after rejecting bids seeking rates it considered too high. The average yield on the three-month paper climbed to 5.138 percent from 5.051 percent.
The auction came days after the BSP raised its key policy rate by 25 basis points as a preemptive move against persistent inflation. The central bank also left the door open to further tightening, warning that inflation pressures could remain elevated through 2027 amid the possible effects of El Niño and higher minimum wages.
Yields on longer Treasury bills also moved higher. The average rate on the 182-day bill rose to 5.517 percent from 5.433 percent, while the yield on the 364-day paper increased to 5.717 percent from 5.640 percent.
The Treasury awarded the full P25 billion offered for the six-month and one-year securities.
Investors also sought higher returns on the government’s 35-day cash management bills. The Treasury awarded P8.25 billion of the P10-billion offering as the average yield jumped to 5.036 percent from 4.823 percent.
The strong oversubscription showed ample appetite for government securities. Still, the higher yields and rejected bids suggested investors are recalibrating expectations for interest rates.
The market expects borrowing costs to stay higher for longer, even as the Treasury remains unwilling to pay whatever investors ask.
