Rates of T-bills, bonds to go up on rate bets

GOVERNMENT securities on offer this week will likely fetch higher rates as investors await another rate hike from the central bank following the faster-than-expected August inflation print.

The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (Tbill) today. Broken down, the Treasury plans to raise P4 billion through the three-month papers, P5 billion via the six-month debt and another P6 billion in one-year T-bills.

The BTr will also auction off P15 billion worth of reissued 10-year Treasury bonds (Tbond) on Tuesday with a remaining life of nine years and six months.

Bond traders interviewed last week said rates on the T-bills on offer today will likely climb from the previous auction.

“So far, the market is saying around 10-15 basis points (bps) higher from the previous auction, but I’m looking at 10-20 basis points even,” a trader said in a phone interview.

“The BTr might accept 20 bps since rates are still rising whatever happens,” the trader added.

The Treasury fully awarded the T-bills it offered last week, borrowing P15 billion as planned versus total tenders amounting to P27.5 billion.

Rates of the three-month, six-month and one-years papers rose to 3.225%, 4.101% and 4.899% respectively.

At the secondary market last Friday, the three- and six-month Treasury bills were quoted 4.0732% and 4.4071%, respectively, while one-year tenor fetched a 4.8988% rate.

The trader added that the 10-year bond auction on Tuesday could fetch a rate between 6.65% and 6.85%.

In July, the government rejected all tenders for its reissued 10-year debt which carry a 6.25% coupon.

Had the BTr accepted all bids, the papers would have fetched an average rate of 6.842%, 49.2 basis points higher from the previous auction. •