The Bureau of the Treasury (BTr) made a full award of Treasury bills (T-bills) worth P15 billion during its auction on Monday as rates increased ahead of likely gradual easing of interest rates.

BTr auctioned off 91-day, 182-day and 364-day papers valued at P5 billion each, resulting in the T-bills’ total bids of P46.7 billion or 3.1 times oversubscription.

The Treasury awarded the full P5 billion for the three-month papers which fetched an average rate of 5.818 percent, up from 5.774 recorded in the auction last 9 December.

BTr awarded another P5 billion for the six-month papers which posted an average rate of 5.975 percent, higher than the 5.922 percent seen in last week’s auction.

1-year notes fetch 6%

BTr also awarded P5 billion for the one-year papers which fetched an average rate of 5.977 percent, up from 5.968 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the government aimed to attract investors as a “window dressing” strategy.

“This is the last Treasury bill auction before the holiday break and included some premium on the crossing-the-year funds as the accounting year-end draws closer,” he said.

However, BTr said the T-bill rates were lower than those in the secondary market based on Bloomberg’s PHP BVAL Reference Rates.

“Treasury bill yields somewhat normalized, being slightly lower versus the comparable short-term PHP BVAL yields as the latest central bank’s policy rate of 6 percent is widely expected to be reduced by another 25 basis points to 5.75 percent on Thursday,” Ricafort elaborated.

Bank of the Philippine Islands chief economist Emilio Neri Jr. said the Bangko Sentral ng Pilipinas will likely loosen its policy again due to manageable local inflation and likely lower Federal Reserve rate which could keep Philippine investment instruments attractive.

“A slew of typhoons caused vegetable prices to soar, but falling prices of key items like rice have tempered overall price increases,” he said.