RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could be mixed, tracking secondary market movements, before the release of September inflation data and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting.
The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7.5 billion each in 91-day and 182-day securities and P7 billion in 364-day papers.
On Tuesday, the government will offer P35 billion in a dual-tenor T-bond offering, or P15 billion in reissued seven-year papers with a remaining life of two years and six months, and P20 billion in reissued 10-year debt with a remaining life of nine years and six months.
T-bill and bond yields could track the mixed week-on-week movements seen at the secondary market as the market looks ahead to the release of the September consumer price index (CPI) report on Tuesday (Oct. 7) and the Monetary Board’s policy meeting on Thursday (Oct. 9), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
A trader said in an e-mail that the reissued seven-year bonds could be quoted at rates from 5.625% to 5.65% on Tuesday, while the reissued 10-year debt could fetch bids carrying yields from 5.975% to 6%.
The trader added that the bond auction could see “decent demand.”
Yields at the secondary market were mixed last week as the short-term tenors were supported by bets of further BSP easing, while longer tenors were affected by market concerns over uncertainties in the United States due to their government’s closure.
At the secondary market on Friday, yields on the 91-day T-bills went down by 2.01 basis points (bps) week on week to end at 4.9153, based on PHP Bloomberg Valuation Service Reference Rates data as of Oct. published on the Philippine Dealing System’s website. Meanwhile, the 182- and 364-day T-bills rose by 1.3 bps and 6.55 bps to close at 5.1765% and 5.3262%, respectively.
The seven-year tenor rose by 2.05 bps week on week to fetch 5.9533%, while the three-year bond, the closest to the remaining life of the papers on offer this week, went up by 2.51 bps to 5.6936%.
For its part, the 10-year bond inched down by 0.4 bp week on week to yield 6.0223%.
A BusinessWorld poll of 12 analysts yielded a median estimate of 1.9% for September inflation, within the BSP’s 1.5-2.3% forecast for the month. If realized, the CPI would be faster than 1.5% in August but would match the 1.9% clip in September 2024.
On the other hand, 10 of 16 analysts in a separate BusinessWorld poll expect the Monetary Board to pause at this week’s meeting due to emerging inflation risks following three consecutive cuts that brought its policy rate to 5%.
The remaining six said the BSP could deliver a fourth straight 25-bp cut to support the economy amid weaker growth prospects.
Last week, the BTr raised P22 billion as planned from the T-bills it auctioned off as the offering was almost four times oversubscribed, with total bids reaching P80.475 billion.
Broken down, the Treasury borrowed P7.5 billion as planned via the 89-day T-bills as total tenders for the tenor reached P21.93 billion. The three-month paper was quoted at an average rate of 4.828%, down by 5.5 bps from the previous auction. Yields accepted were from 4.71% to 4.9%.
The government also raised P7.5 billion as programmed from the 182-day securities as tenders amounted to P31.2 billion. The average rate of the six-month T-bill was at 5.075%, easing 0.6 bp from the previous week, with accepted rates spanning from 4.94% to 5.117%.
Lastly, the Treasury sold the planned P7 billion in 364-day debt as demand for the tenor totaled P27.345 billion. The average rate of the one-year T-bill dropped by 2.4 bps to 5.171%. Bids awarded carried yields from 5.027% to 5.215%.
Meanwhile, the reissued seven-year bonds to be offered on Tuesday were last auctioned off on Sept. 23, where the government raised P10 billion as planned at an average rate of 5.605%, well above the 3.625% coupon rate.
The 10-year debt papers on offer this week were last sold on Sept. 16, where the Treasury raised P25 billion as planned at an average rate of 5.075%, below the 6.375% coupon rate.
The BTr is looking 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 P1.56 trillion or 5.5% of gross domestic product this year. — Aaron Michael C. Sy