Rates of Treasury bills, bonds may be mixed on dollar, Fed

Rates of Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week may be mixed amid a generally stronger dollar recently as US Federal Reserve officials remained hawkish.

The Bureau of the Treasury (BTr) will auction off PHP 15 billion in T-bills on Monday, or PHP 5 billion each in 91-, 182-, and 364-day papers.

On Tuesday, it will offer PHP 30 billion in reissued 20-year T-bonds with a remaining life of seven years and one month.

T-bill and T-bond rates could track the mixed movements in secondary market yields amid hawkish signals from Fed policy makers and a stronger dollar recently, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Secondary market rates mostly fell on Friday due to softer US economic data, a trader added in an e-mail.

At the secondary market on Friday, the 91-day T-bill went down by 5.25 basis points (bps) week on week to yield 5.7356%, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website. Meanwhile, the 182-day and 364-day T-bills went up by 1.67 bps and 3.3 bps to end at 5.9596% and 6.0653%, respectively.

On the other hand, the 20-year bond yield inched down by 0.52 bp week on week to 6.8286%, while the seven-year paper, the tenor closest to the remaining life of the T-bonds on offer this week, went up by 1.29 bps to 6.6272%.

The trader expects the reissued T-bonds to be auctioned off on Tuesday to fetch yields ranging from 6.6% to 6.75%, which could steepen the curve.

Bets on May Philippine inflation data to be released on Wednesday, June 5, will also drive bids for the bonds, the trader added.

A BusinessWorld poll of 16 analysts yielded a median estimate of 4% for May headline inflation, within the central bank’s 3.7-4.5% forecast for the month.

If realized, this would be faster than the 3.8% print in April but slower than 6.1% a year earlier.

Last week, the BTr raised PHP 15 billion as planned from the T-bills it offered on Monday as total bids reached PHP 38.296 billion or more than twice the amount on the auction block.

Broken down, the Treasury borrowed PHP 5 billion as programmed from the 91-day T-bills as tenders for the tenor reached PHP 15.25 billion. The average rate for the three-month paper rose by 0.7 bp to 5.719% from the previous last week. Accepted rates ranged from 5.698% to 5.725%.

The government likewise made a full PHP 5-billion award of the 182-day securities, with bids reaching PHP 11.16 billion. The average rate for the six-month T-bill stood at 5.886%, up by 2.2 bps, with accepted rates at 5.869% to 5.909%.

Lastly, the Treasury raised the planned PHP 5 billion via the 364-day debt papers as demand for the tenor totaled PHP 11.885 billion. The average rate of the one-year debt went down by 3.6 bps to 6.043%. Accepted yields were from 6% to 6.084%.

Meanwhile, the reissued 20-year bonds to be auctioned off on Tuesday were last offered on April 30, where the government raised just PHP 27.476 billion out of the planned PHP 30 billion at an average rate of 7.058%, 94.2 bps below the 8% coupon for the series. — A.M.C. Sy