RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may be mixed after the Bangko Sentral ng Pilipinas (BSP) chief said they have room to further ease their policy stance.
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 10-year T-bonds with a remaining life of nine years and 14 days.
T-bill rate could track the mixed movements in benchmark short-term papers at the secondary market on expectations of a BSP cut next month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
At the secondary market, yields on the 91- and 182-day T-bills went down by 25.38 basis points (bps) and 19.34 bps week on week to end at 5.4973% and 5.6265%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 17 published on the Philippine Dealing System’s website.
Meanwhile, the 364-day T-bill saw its rate rise by 3.92 bps to 5.8954%.
BSP Governor Eli M. Remolona, Jr. this month said the Philippine central bank still has room to continue cutting interest rates as inflation is well within its annual goal, adding that current benchmark borrowing costs remain “restrictive.”
The Monetary Board has slashed benchmark borrowing costs by a total of 75 bps since it began its easing cycle in August, bringing its policy rate to 5.75%.
Mr. Remolona previously said that while the BSP remains in an easing cycle, 100 bps worth of cuts this year may be “too much” amid inflation concerns. He added that they will continue to bring down benchmark interest rates in “baby steps.”
The Monetary Board will hold its first rate-setting meeting for this year on Feb. 20.
Meanwhile, the reissued 10-year bonds to be auctioned off on Tuesday could climb to mirror the week-on-week increase in the tenor’s yield at the secondary market amid high global crude oil prices recently and cautiousness ahead of the inauguration of US President-elect Donald J. Trump, Mr. Ricafort said.
A trader said that the bonds could fetch rates ranging from 6.3% to 6.4%, with demand possibly reaching around P45 billion.
“The government securities market was very quiet [on Friday] amid a lack of catalysts. Players were noticeably cautious, and this will likely be the case [this] week,” the trader said in an e-mail.
At the secondary market, the 10-year bond went up by 18.48 bps week on week to end at 6.3333% on Friday.
Last week, the BTr raised P27.6 billion from the T-bills it auctioned off, higher than the P22-billion plan, as total bids reached P93.776 billion, more than four times as much as the amount on offer. This was also higher than the P70.975 billion in tenders seen on Jan. 7.
Broken down, the Treasury borrowed P9.8 billion from the 91-day T-bills, higher than the programmed P7 billion, as tenders for the tenor reached P37.863 billion. The three-month paper was quoted at an average rate of 5.588%, dropping by 19.4 bps from the previous auction, with the BTr only accepting bids with this yield.
The government likewise made a P9.8-billion award of the 182-day securities, above the P7-billion program, as bids reached P31.375 billion. The average rate of the six-month T-bill stood at 5.638%, falling by 27.3 bps, with the BTr only accepting tenders with this rate.
Lastly, the Treasury raised P8 billion as planned via the 364-day debt papers as demand for the tenor totaled P24.538 billion. The average rate of the one-year debt decreased by 4 bps to 5.891%, with bids accepted carrying rates of 5.85% to 5.9%.
Meanwhile, the reissued 10-year bonds to be auctioned off on Tuesday were last offered on Dec. 10, where the government raised just P15 billion as planned at an average rate of 5.89%, lower than the 6.25% coupon.
The Treasury plans to raise P213 billion from the domestic market this month, or P88 billion via T-bills and P125 billion through T-bonds. — Aaron Michael C. Sy
