BTr secures P22.6B after BSP rate cut

The Bureau of the Treasury (BTr) raised P22.6 billion, higher than the initial offer of P20 billion for its bills auction on Monday which saw mostly lower rates following the policy rate reduction of the Bangko Sentral ng Pilipinas (BSP).

The BTr offered 91-day, 182-day, and 364-day debt papers which attracted total bids worth P61.3 billion or 3.1 times bigger than it initially programmed.

The Treasury fully awarded P6.5 billion for the 91-day papers at an average rate of 5.940 percent, slightly up from 5.900 recorded in the previous auction on 12 August.

For the 182-day papers, the BTr accepted a higher amount of P9.1 billion than its initial offer of P6.5 billion as the average rate settled at 5.989 percent, down from 6.093 percent posted in the previous auction. Meanwhile, total bids were more than double at P21.9 billion.

Last, the BTr fully awarded P7 billion for 364-day papers which fetched an average rate of 6.023 percent, slightly down from 6.62 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the Treasury bills’ lower rates for longer-tenor debt signaled investors’ anticipation of the BSP possibly easing its policy rate below the existing 6.25 percent after several months.

Fed cuts can be matched

“The future rate cuts by the US Federal Reserve could be matched locally to maintain healthy interest rate differentials for foreign investments,” he said.

“It is widely expected that the Federal Reserve might start cutting rates by at least 0.25 percentage point in September,” Ricafort continued.

Investors usually ask for higher rates before possible downtrend in BSP rates to maximize investment returns.

Ricafort also said the lower Treasury rates for longer-tenor debt reflected fewer risks of losses to investors due to recent cheaper commodity prices.

“The peso exchange rate stood at its strongest in more than four months versus the US dollar. Global crude oil prices were also among the two-month lows,” he said.

BSP Governor Eli Remolona Jr. projected the Federal Reserve to cut its own rate by 100 basis points (bps) by year-end and 150 bps in 2025.