The Bureau of the Treasury (BTr) raised P27.6 billion on its auction on Monday, higher than the initial program of P22 billion as rates continued to fall after more signals of easing monetary policy from the Bangko Sentral ng Pilipinas (BSP).

BTr auctioned off 92-day, 182-day, and 364-day papers which drew total bids amounting to P93.8 billion or 4.3 times oversubscription.

The Treasury awarded P9.8 billion for the three-month debt papers, higher than the initial offer of P7 billion. The papers fetched an average rate of 5.588 percent, down from 5.782 percent posted during the auction on 6 January.

BTr awarded another P9.8 billion for the six-month papers, an increase from P7 billion in the last week’s auction. The papers had an average rate of 5.638 percent, down from 5.911 percent in the previous auction.

Room to ease rates

Last, BTr awarded P8 billion for the one-year papers as programmed. The papers fetched an average rate 5.891 percent, lower than the 5.931 percent recorded last week.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the higher demand reflected stronger chances of declining BSP policy rates due to likely low inflation rates this year.

“Treasury bills’ yields declined after the initial implementation of the maximum suggested retail price for imported rice at P58 per kilogram in Metro Manila on 20 January, which could further support benign inflation,” he said.

Ricafort said this supports the dovish stance of BSP Governor and Monetary Board Chairman Eli Remolona Jr.

“The BSP Governor said the Board has room to ease as the policy rate is still restrictive. He is aiming for the Goldilocks rate,” the economist shared.

Ricafort said the Treasury bills’ rates have declined below the 5.75 percent key BSP overnight rate on possible policy rate cuts as early as the next BSP rate-setting meeting on 20 February.