Despite lower borrowing costs, the Marcos administration’s latest debt sale on Monday, Aug. 4, saw weaker demand compared to previous treasury bills (T-bills) auctions.

The Bureau of the Treasury (BTr) nonetheless raised an above-target ₱28.4 billion and sustained a four-week streak of declining interest rates driven by dovish central bank signals and expectations of further monetary easing amid a continued inflation slowdown.

During the sale of three-month, six-month, and one-year debt securities, the BTr's total fund-raising from domestic creditors through the sale of short-term T-bills surpassed its target for the fifth-consecutive week.

Its ₱25-billion borrowing program received a total of ₱87.2 billion in bids, more than three times the amount offered. But this week’s demand was lower than last week’s ₱103.5 billion in bids for similar offerings.

The BTr fully awarded its ₱7-billion offer for 91-day T-bills, whose tenders reached ₱32.5 billion. The average rate was 5.318 percent, slightly lower than the previous week’s 5.388 percent.

For 182-day debt securities, the BTr awarded ₱11.9 billion to local creditors, exceeding the ₱8.5-billion offered amount, as bids reached ₱29 billion. It fetched an average rate of 5.535 percent, also modestly lower than last week’s 5.543 percent.

Lastly, the BTr borrowed the planned ₱9.5 billion through 364-day IOUs. Demand reached ₱25.7 billion. Unlike the shorter T-bills, its average rate inched up slightly to 5.637 percent from 5.637 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 5.415 percent, 5.557 percent, and 5.663 percent, respectively.

Rates for the six-month and one-year securities were lower than the previous week’s benchmark rates, but the three-month debt paper was higher. Rates across the board were higher than the key borrowing cost of 5.25 percent.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort said that the continued decline in interest rates for five consecutive weeks was being driven by dovish signals from the Bangko Sentral ng Pilipinas (BSP) of two quarter-point reductions before the year ends.

Private-sector economists also expect two additional 25-basis point (bp) cuts before year-end, supported by expectations of sustained inflation slowdown in the next months.