RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may move sideways as demand could weaken following the government’s jumbo issuance of new 10-year fixed-rate Treasury notes (FXTN).
The Bureau of the Treasury (BTr) will offer P25 billion in T-bills on Monday, or P8 billion each in 91- and 182-day papers and P9 billion in 364-day papers.
On Tuesday, the government will auction off P30 billion in reissued seven-year T-bonds with a remaining life of five years and two months.
The rates of the T-bills and T-bonds on offer this week could track sideways movements in secondary market yields before the end of the BTr’s public offering of new benchmark 10-year bonds, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The jumbo bond issue likely “siphoned off some of the excess liquidity from the financial system that could have reduced demand for… the upcoming Treasury bill and Treasury bond offerings,” Mr. Ricafort said.
At the secondary market on Friday, the rates of the 91- and 364-day T-bills rose by 4.25 basis points (bps) and 5.21 bps week on week to end at 5.4558%, and 5.7362%, respectively, while the 182-day debt went down by 2.19 bps to yield 5.6089%, based on PHP Bloomberg Valuation Service (BVAL) Reference Rates data as of April 25 published on the Philippine Dealing System’s website.
Meanwhile, the yield on the seven-year bond went down by 1.43 bps week on week to close at 6.0928%, while the rate of five-year debt — the tenor closest to the remaining life of the T-bonds on offer on Tuesday — also declined by 1.75 bps to 5.9247%.
The government raised a total of P300 billion via its offering of new 10-year benchmark bonds, the BTr announced on Friday.
This was 10 times the initial P30-billion program as bids reached P307.05 billion, allowing the Treasury to end the public offer period on April 23, a day earlier than planned.
The BTr raised an initial P135 billion from the papers at the rate-setting auction on April 15 as tenders reached P197.3 billion.
The notes fetched a coupon rate of 6.375%. Accepted bid yields ranged from 6% to 6.4%, resulting in an average rate of 6.286%.
The issue will be listed on the Philippine Dealing & Exchange Corp. fixed-income board on April 28 (Monday).
Last week, the BTr raised P25 billion as planned from the T-bills it auctioned off as total bids reached P73.913 billion or nearly thrice the amount on offer.
Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills as tenders for the tenor reached P13.67 billion. The three-month paper was quoted at an average rate of 5.546%, rising by 12.4 bps from the previous auction. Tenders accepted by the BTr carried yields of 5.425% to 5.625%.
The government likewise made a full P8-billion award of the 182-day securities as bids for the paper amounted to P25.863 billion. The average rate of the six-month T-bill was at 5.675%, up by 1.8 bps, with accepted rates ranging from 5.62% to 5.696%.
Lastly, the Treasury raised P9 billion as planned via the 364-day debt papers as demand for the tenor totaled P34.38 billion. The average rate of the one-year T-bill slipped by 2.3 bps to 5.691%, with bids accepted having yields of 5.684% to 5.7%.
Meanwhile, the reissued seven-year bonds to be offered on Tuesday were last auctioned off on March 4, where the government raised P30 billion as planned at an average rate of 6.019%, lower than the 6.375% coupon.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy
