Debt yields consolidate

YIELDS on government securities moved sideways in the shortened trading week as the market remained in a “consolidating phase” at the close of the quarter.

Local debt yields increased by 1.75 basis points ( bps) on the average week- onweek, data from the Philippine Dealing and Exchange Corp. (PDEx) as of March 28 showed.

“Yields relatively have been on a consolidating phase. The only catalyst that we have so far is the finality of the actual awards that’s going to come up from the issuance [ by the Bureau of the Treasury ( BTr)],” said Security Bank Corp. chief investment officer Noel S. Reyes.

Likewise, a bond trader said the previous week’s yield movement was “biased on the borrowing plans of the government.”

“[ The] planned P325 billion bonds to be auctioned [pushed] yields higher,” the bond trader added.

Last week, the BTr announced that it wants to borrow P325 billion locally this quarter, higher than the P240 billion it offered in the first three months and the P180 billion the Treasury placed on the auction block in the same quarter last year as it now will be conducting two auctions per week, compared to once-a-week auctions held in the first quarter. It will auction off P130 billion in Treasury bonds ( T- bonds) and P195 billion in Treasury bills (Tbills) in the April-June period.

According to Mr. Reyes, the government’s issuances will determine the movement of the bond market this week, but said market players might also take into consideration the central bank’s reluctance to hike interest rates.

“Bond market will continue to be in a range, but of course, definitely in the medium term, [it will be a bit] higher in terms of the trend because the market will try and price in the BSP (Bangko Sentral ng Pilipinas) being behind the curve,” he said.

“They might price that in a little more… [ A] ny significant reversal in yields will be taken as an opportunity to lighten positions.”

At the secondary market, yields on the three-year bonds increased 24.99 bps to fetch 4.6098%.

It was followed by the five-year bonds and the 364- day T- bills whose rates rose by 7.87 bps and 7.50 bps, respectively, fetching 5.2403% and 3.0750%.

The yield of the four-year Tbond climbed 5.07 bps to 5.0179% while that of the two- and 10-year bonds were up by 2.69 bps and 2.63 bps, respectively, to close at 4.1613% and 6%.

On the other hand, yields on the 91- and 182-day T-bills went down by 19.47 bps and 10.08 bps, respectively, ending with 3.0723% and 3.2063%.

The rate of the 20-year bond dipped 2.64 bps to 7.1625% while that of the seven-year tenor went down 1.11 bps to 6.7375%. —