RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may inch down to track the broad decline in US Treasury yields amid worries over the world’s largest economy.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.
On Tuesday, the government will offer P30 billion in reissued seven-year T-bonds with a remaining life of five years and four months.
T-bill and T-bond yields could track the slight decline in secondary market rates on Friday following the easing in US Treasuries, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The reissued seven-year bonds on offer this week could fetch yields ranging from 5.975% to 6.05%, a trader said in an e-mail, close to secondary market levels.
At the secondary market, yields on the 91-, and 364-day T-bills inched down by 1.39 basis points (bps) and 0.47 bp week on week to end at 5.3794% and 5.7842%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Feb. 28 published on the Philippine Dealing System’s website. Meanwhile, the 182-day paper’s yield inched up by 1.96 bps to 5.6116%.
Meanwhile, the seven-year bond’s rate slipped by 0.52 bp week on week to close at 6.0036% while the five-year paper, the tenor closest to the remaining life of the T-bonds, went down by 0.13 bp to end at 5.9212%.
On Friday, the yield on benchmark US 10-year notes fell 6 basis points to 4.227% from 4.287% late on Thursday, Reuters reported.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 8.9 bps to 3.991% from 4.08% late on Thursday.
The prospect of higher US tariffs sent jitters through markets and revived concerns about an escalating global trade war.
US President Donald J. Trump said on Thursday that 25% duties on imports from Canada and Mexico will come into effect on March 4 — not April 2 as he had suggested a day earlier — and said goods from China will be subject to an additional 10% duty. Last week, he also floated 25% tariffs on shipments from the European Union.
Mr. Ricafort added that T-bill and T-bond yields may slip on expectations of slower Philippine headline inflation last month.
A BusinessWorld poll of 18 analysts yielded a median estimate of 2.6% for the February consumer price index (CPI).
If realized, this would be slower than the 2.9% in January and the 3.4% clip in the same month a year ago.
This would also be the lowest print in four months or since the 2.3% recorded in October and settle within the central bank’s 2.3% to 3% estimate for the month.
The Philippine Statistics Authority will release February CPI data on March 5 (Wednesday).
Last week, the BTr raised P22 billion as planned from the T-bills it auctioned off as total bids reached P83.711 billion or almost four times as much as the amount on offer.
Broken down, the Treasury borrowed P7 billion as planned via the 91-day T-bills as tenders for the tenor reached P24.475 billion. The three-month paper was quoted at an average rate of 5.329%, inching up by 1.1 bps from the previous auction, with accepted rates ranging from 5.28% to 5.358%.
The government also made a full P7-billion award of the 182-day securities as bids stood at P25.936 billion. The average rate of the six-month T-bill stood at 5.672%, 1 bp higher than the previous week. Tenders accepted by the BTr carried yields of 5.64% to 5.693%.
Lastly, the Treasury raised the programmed P8 billion via the 364-day debt papers as demand for the tenor totaled P33.3 billion. The average rate of the one-year debt decreased by 2.6 bps to 5.754%, with bids accepted having rates of 5.74% to 5.77%.
Meanwhile, the reissued seven-year bonds to be offered on Tuesday were last auctioned off on Feb. 4, where the BTr raised a total of P40 billion via the papers, above the planned P30 billion, as it opened its tap facility to accommodate strong demand. The bonds fetched an average rate of 5.968%, lower than the 6.375% coupon rate.
The Treasury is looking to raise P147 billion from the domestic market this month, or P22 billion from T-bills and P125 billion from T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy with Reuters
