Yields on Philippine short-term government securities climbed during Monday’s auction as investor demand weakened, with market participants holding back funds ahead of the government’s upcoming retail bond offering.
The Bureau of the Treasury (BTr) raised a combined P51.733 billion from cash management bills (CMBs) and Treasury bills (T-bills), falling short of its P82-billion program despite total tenders reaching P92.418 billion. The partial award reflected softer demand across several tenors.
The government fully awarded its P7-billion offer of 364-day T-bills, but the average rate increased to 6.115% from 6.043% a week earlier. Accepted yields ranged from 6% to 6.188%.
For the 90-day T-bills, the Treasury accepted P17.354 billion, below its P20-billion target, even though bids reached P25.454 billion. The average rate rose to 5.535% from 5.431% previously, with accepted yields ranging from 5.459% to 5.599%.
The weaker demand was also evident in the CMB auction. The Treasury raised only P12.379 billion against a P40-billion target, with total tenders for the two CMB tenors reaching about P20.5 billion.
Market participants attributed the thinner demand partly to investors positioning themselves for the government’s next bond auction and the upcoming two-and-a-half-year Retail Treasury Bond (RTB) 32 issuance.
Before Monday’s auction, secondary-market rates for 35-, 63-, 91-, 182-, and 364-day government bills were quoted at 5.1552%, 5.256%, 5.4176%, 5.7811%, and 5.9782%, respectively.
The latest auction highlights the competition for investor funds between short-term government securities and longer-term retail offerings. With RTB 32 set to enter the market, investors appear to be weighing where to place available funds as the government continues to tap both institutional and retail channels for financing.
The higher T-bill yields also come as Philippine government securities continue to reflect changing expectations for interest rates, inflation and liquidity conditions. The latest auction results suggest investors are demanding slightly higher returns on short-dated securities while awaiting the terms and pricing of the new retail bonds.
