The government has once again exceeded its ₱25-billion borrowing target, raising ₱28.6 billion from short-term debt papers, as cooling inflation and growing expectations of a Bangko Sentral ng Pilipinas (BSP) rate cut sustained investor demand and pushed yields lower across all tenors.

At the latest treasury bills (T-bills) auction on Monday, June 9, the Bureau of the Treasury (BTr) awarded more than its planned fund-raising, with total bids reaching ₱98 billion—nearly four times the amount of debt paper it offered.

This week’s total bids were slightly lower than the ₱116.3 billion in tenders from the previous T-bill auction on June 2.

The government fully awarded the ₱8-billion offering for 91-day T-bills. Total tenders reached ₱20.2 billion. The average rate was 5.451 percent, slightly lower than the previous week’s 5.452-percent rate.

For 182-day debt papers, the BTr also raised ₱8 billion, fully awarding the offered amount. Bids reached ₱38.6 billion. It fetched an average rate of 5.524 percent, lower by 4.1 basis points (bps) than last week’s 5.565 percent.

Notably, the BTr borrowed more than the planned ₱9 billion through 364-day IOUs, raising ₱12.6 billion. Demand reached ₱39.4 billion. Similarly, the average rate dropped slightly by 2.4 bps to 5.656 percent from 5.68 percent in the previous auction.

Prior to Monday’s auction, PHP Bloomberg Valuation (PHP BVAL) Reference Rates showed that the 91-, 182-, and 364-day T-bills were quoted at 5.441 percent, 5.61 percent, and 5.681 percent, respectively. Benchmark rates for both the three-month and six-month debt papers inched up slightly from the previous week, but the one-year securities went down.

The average rate for three-month T-bills clocked in lower than the key borrowing costs of 5.5 percent. Meanwhile, longer-dated IOUs stood higher than the benchmark.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), the continued decline in T-bill interest rates followed a further drop in inflation to a new 5.5-year low of 1.3 percent in May.

He said this development may pave the way for another quarter-point rate cut by the BSP in its upcoming June 19 policy meeting.

Consequently, some investors are securing higher T-bill yields before potential declines in both BSP rates and T-bill yields, the economist added.