RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week may end mixed as data released last week bolstered expectations for rate cuts by both the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve at their respective meetings this month.
The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, or P5 billion each in 91-, 182-, and 364-day papers.
On Tuesday, the government will offer P15 billion in reissued 10-year T-bonds with a remaining life of nine years and one month.
T-bill and T-bond rates could track the mixed movements in the secondary market yields last week as the pickup in Philippine headline inflation last month boosted bets of a rate cut by the BSP Monetary Board at their last meeting for the year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
At the secondary market, the 91-, 182-, and 364-day T-bills went up by 5.1 basis points (bps), 4.88 bps, and 7.56 bps week on week to end at 5.6955%, 5.9724%, and 6.0804%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Dec. 6 published on the Philippine Dealing System’s website.
Meanwhile, the 10-year bond’s yield declined by 11.41 bps week on week to end at 5.8846%.
The 10-year bond to be auctioned off on Tuesday could see strong demand as this would be the last T-bond offering this year, a trader said in an e-mail.
The papers could fetch yields between 5.85% and 5.9% after US nonfarm payrolls data released on Friday came in within expectations, bolstering expectations of another Fed cut at their Dec. 17-18 meeting, the trader added.
Philippine headline inflation picked up to 2.5% in November from 2.3% in October, the government reported last week.
The Monetary Board will hold its last policy meeting for the year on Dec. 19. BSP Governor Eli M. Remolona, Jr. has said that the Philippine central bank could cut or pause at this month’s review.
Last week, the BTr raised P15 billion as planned from the T-bills it auctioned off as total bids reached P57.8 billion, almost four times as much as the amount on offer.
Broken down, the Treasury borrowed the programmed P5 billion through the 91-day T-bills as tenders for the tenor reached P21.75 billion. The three-month paper was quoted at an average rate of 5.63%, down by 1.7 bps from the previous week’s auction, with accepted bids having yields ranging from 5.62% to 5.64%.
The government likewise made a full P5-billion award of the 182-day securities, with bids reaching P16.11 billion. The average rate of the six-month T-bill stood at 5.905%, up by 2.3 bps, with accepted rates at 5.85% to 5.925%
Lastly, the Treasury raised P5 billion as planned via the 364-day debt papers as demand for the tenor totaled P19.94 billion. The average rate of the one-year debt increased by 3.2 bps to 5.937%, with the tenders accepted carrying yields ranging from 5.92% to 5.948%.
Meanwhile, the reissued 10-year bonds to be auctioned off on Tuesday were last offered on Oct. 29, where the BTr raised P15 billion as planned at an average rate of 5.87%, below the 6.25% coupon.
The Treasury is looking to borrow P90 billion from the domestic market this month, or P60 billion via T-bills and P30 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.52 trillion or 5.7% of gross domestic product this year. — A.M.C. Sy
