T-bill, bond rates may be mixed before GDP data

RATES of the Treasury bill (T-bills) and Treasury bonds (T-bonds) on offer this week could end mixed as players await the release of Philippine gross domestic product (GDP) growth data that could affect the central bank’s monetary easing path.

The Bureau of the Treasury (BTr) will auction off P27 billion in T-bills on Monday, or P9 billion each in 91-, 182-, and 364-day papers.

On Tuesday, the government is targeting to raise up to P50 billion from a dual-tenor T-bond offering, as it could borrow between P20 billion and P30 billion each through reissued seven-year papers that have a remaining life of two years and six months, and via reissued 20-year debt with a remaining life of 18 years and three months.

T-bill and T-bond rates could follow the mixed week-on-week movements seen at the secondary market as players await the release of fourth-quarter and full-year 2025 GDP growth data and how it will affect the Bangko Sentral ng Pilipinas’ (BSP) next policy move, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Secondary market yields were range-bound on Friday as players positioned before the GDP data release, a trader likewise said in an e-mail.

At the secondary market on Friday, rates at the short end dropped while those for longer tenors rose amid lingering global and domestic uncertainty, with the market waiting for fresh leads that could dictate short-term yield direction.

Yields on the 91-, 182-, and 364-day T-bills went down by 3.11 basis points (bps), 4.52 bps, and 5.16 bps week on week to end at 4.7664%, 4.8359%, and 4.8912%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 23 published on the Philippine Dealing System’s website.

For its part, the yield on the seven-year bond rose by 4.45 bps week on week to close at 5.9368%, while the three-year debt, the tenor closest to the remaining life of the papers on offer on Tuesday, increased by 2.65 bps to 5.4974%.

Meanwhile, the 20-year note rose by 1.21 bps to yield 6.4996%.

The government will release fourth-quarter and full-year Philippine GDP on Thursday (Jan. 29).

The economy likely expanded by 4.2% in the fourth quarter, based on a BusinessWorld poll of 18 economists and analysts. This would be faster than the 4% growth in the third quarter, but slower than 5.3% expansion in the same period in 2024.

This would put full-year growth at 4.8%, below the government’s 5.5%-6.5% target. This would also be slower than the 5.7% expansion in 2024 and the weakest since the 9.5% contraction posted in 2020.

On Friday, BSP Governor Eli M. Remolona, Jr. said that another cut remains uncertain, adding that price stability is their primary concern.

He said that while they will consider the latest gross domestic product (GDP) data when the Monetary Board meets on Feb. 19, weaker-than-expected growth wouldn’t automatically warrant further easing.

The BSP on Dec. 11 delivered a fifth straight 25-bp reduction in benchmark interest rates, bringing the policy rate to an over three-year low of 4.5%. It has lowered borrowing costs by a total of 200 bps since its rate cut cycle began in August 2024.

Mr. Remolona earlier said they could implement one last cut to help support domestic demand as lingering governance concerns due to a corruption scandal involving state infrastructure projects have dragged both public and private investments, causing Philippine GDP growth to slump to a four-year low of 4% in the third quarter of 2025.

Analysts have said that the central bank could ease further to help prop up the economy as inflation remains under control.

Last week, the BTr raised P37.8 billion via the T-bills it auctioned off, higher than the P27-billion plan as the offer was nearly five times oversubscribed, with total tenders reaching P126.59 billion. The Auction Committee doubled its acceptance of noncompetitive bids for all tenors to P7.2 billion each.

Broken down, the government awarded P12.6 billion in 91-day T-bills, above the P9-billion plan, as demand for the tenor reached P35.65 billion. The three-month paper fetched an average rate of 4.723%, inching down by 0.8 bp from the yield seen at the previous auction. Rates accepted ranged from 4.68% to 4.743%.

The Treasury also borrowed P12.6 billion via the 182-day debt versus the P9-billion program as tenders hit P45.85 billion. The average rate of the six-month T-bill was at 4.817%, easing by 3.3 bps from the previous week. Tenders awarded carried yields from 4.8% to 4.835%.

Lastly, the BTr raised P12.6 billion from the 364-day securities, more than the P9-billion plan, as bids totaled P45.09 billion. The one-year paper’s average yield was at 4.888%, down by 2.8 bps. Accepted rates were from 4.875% to 4.893%.

Meanwhile, the reissued seven-year T-bonds to be offered on Tuesday were last auctioned off on Jan. 6, where the government raised P20 billion as planned at an average rate of 5.467%, above the 3.75% coupon rate.

For their part, the 20-year notes were last sold on Nov. 18, where the government raised P15 billion as programmed at an average rate of 6.424%, below the 6.875% coupon rate.

The Treasury wants to raise P180 billion from the domestic market this month, or P110 billion via T-bills and P70 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.647 trillion or 5.3% of gross domestic product this year. — Aaron Michael C. Sy