Philippine T-bills, T-bonds may track US job data

The rates of Treasury bills (T-bills) and (T-bonds) would move this week depending on the results of US nonfarm payroll data, traders said at the weekend.

A trader said in an e-mail the rate for the 10-year bond could range from 6.25% to 6.3% as US job creation for February was expected to slow.

The Bureau of the Treasury (BTr) will auction off PHP 15 billion in T-bills on Monday, or PHP 5 billion each in 90-, 182- and 364-day debt.

On Tuesday, it will sell PHP 30 billion of reissued 10-year T-bonds with a remaining life of nine years and 10 months.

US job growth quickened in February, but higher unemployment and moderate wage gains kept on the table an anticipated interest rate cut in June by the US Federal Reserve.

US nonfarm payrolls increased by 275,000 jobs last month, the Labor department said on Friday. Data for January was revised down to show 229,000 jobs created instead of 353,000. Economists polled by Reuters had forecast 200,000 jobs would be added.

Philippine T-bill and T-bond rates could match the mixed movements on the secondary market after inflation picked up in February, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

On the secondary market on Friday, the rates of the 91- and 182-day T-bills rose by 3.6 basis points (bps) and 1.71 bps week on week to 5.7652% and 5.9746%, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System website. The 364-day T-bill fell by 0.39 bp to 6.1049%.

The 10-year bond gained 0.93 bp to 6.2528%.

Inflation quickened to 3.4% last month from 2.8% in January and 8.6% a year ago.

This was the first time that inflation picked up month on month since September. For the first two months, it averaged 3.1%, within the BSP’s 2-4% annual target.

Last week, the BTr raised PHP 15 billion from its sale of T-bills as total bids reached PHP 36.888 billion, more than twice the amount on the auction block.

The Treasury raised PHP 5 billion from 91-day T-bills as tenders reached PHP 9.428 billion. The average rate for the three-month paper rose by 6.8 bps to 5.778% from the previous week. Accepted rates ranged from 5.75% to 5.799%.

The government likewise fully awarded PHP 5 billion of 182-day securities as bids reached PHP 13.31 billion. The average rate for the six-month T-bill stood at 5.995%, up by 2.4 bps, with accepted rates at 5.989% to 6%.

The BTr also borrowed PHP 5 billion via 364-day debt as demand totaled PHP 14.16 billion. The average rate of the one-year T-bill rose by 1.5 bps to 6.1%. Accepted yields were 6.089% to 6.125%.

The reissued T-bonds to be offered on Tuesday were first offered on Jan. 23, when the government raised PHP 35 billion, higher than the PHP 30-billion program after the BTr opened its tap facility to take advantage of strong demand. The bonds fetched a coupon rate of 6.25% and an average rate of 6.218%.

The BTr is looking at raising PHP 180 billion from the domestic market this month — PHP 60 billion from T-bills and PHP 120 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of economic output this year. — Aaron Michael C. Sy