T-bill, bond rates may climb following RTB offer

Rates of Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week could mirror the increase in secondary market yields following weaker demand for debt amid the government’s retail bond offering.

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 fresh 20-year T-bonds.

T-bill and T-bond rates may climb to track the rise in secondary market yields last week, which came amid decreased liquidity due to the government’s offering of retail Treasury bonds (RTBs), Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“There were reports that the RTB offering could have exceeded the target of PHP 400 billion, thereby mopping up some of the excess liquidity from the financial system, increase the supply of government securities, and partly led to the upward correction in PHP BVAL (Bloomberg Valuation Service) yields recently,” Mr. Ricafort said.

Meanwhile, the 20-year bonds to be offered on Tuesday could fetch rates ranging from 6.25% to 6.375%, with demand expected to be strong, a trader said in an e-mail.

At the secondary market on Friday, rates of the 91-, 182-, and 364-day T-bill rates went up by 5.22 basis points (bps), 4.48 bps, and 5.32 bps week on week to end at 5.6226%, 5.9045%, and 6.1323%, respectively, based on PHP BVAL Reference Rates data published on the Philippine Dealing System’s website.

The 20-year bond also rose by 4.24 bps week on week to yield 6.3995%.

The BTr borrowed a record PHP 584.86 billion from its offering of five-year RTBs, it said in a statement over the weekend.

Secondary market yields rose as strong US economic data recently bolstered views that the Federal Reserve could push back its rate cuts, Mr. Ricafort added.

Last week, the BTr raised PHP 14.5 billion from its offering of T-bills, lower than the planned PHP 15 billion, even as total bids reached PHP 30.444 billion or more than twice the amount on the auction block.

Broken down, the Treasury awarded only PHP 4.5 billion in 91-day T-bills, below the PHP 5-billion program, despite tenders for the tenor reaching PHP 6.072 billion. The average rate for the three-month paper rose by 8.6 bps to 5.592%. Accepted rates ranged from 5.55% to 5.65%.

Meanwhile, the government raised PHP 5 billion as planned from the 182-day securities as bids stood at PHP 10.26 billion. The average rate for the six-month T-bill stood at 5.972%, up by 9.3 bps from the previous week, with accepted rates at 5.894% to 5.95%.

Lastly, the BTr borrowed the programmed PHP 5 billion via the 364-day debt papers as demand for the tenor totaled PHP 14.112 billion. The average rate of the one-year T-bill inched up by 1.5 bps to 6.079%. Accepted yields were from 6.05% to 6.09%.

The BTr plans to raise PHP 150 billion from the domestic market this month, or PHP 60 billion via T-bills and PHP 90 billion through T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at 5.1% of gross domestic product this year or PHP 1.39 trillion. — A.M.C. Sy