T-bills, bonds rates likely mixed

YIELDS ON Treasury bonds (Tbond) on offer on Tuesday are expected to decline, with Treasury bill (T-bill) rates seen to move sideways, ahead of the release of November inflation data.

The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills today, broken down into P4 billion, P5 billion and P6 billion for the three-month, sixmonth and one-year debt papers, respectively.

The government will also offer P15 billion in reissued 10-year bonds tomorrow with a remaining life of nine years and three months. The papers carry a 6.25% coupon rate.

A bond trader said rates of the T-bills on offer today will likely move sideways, while another said rates will likely be steady given market liquidity.

Last week, the BTr partially awarded the T-bills on auction, borrowing P11 billion out of the planned P15-billion, as it rejected all bids on the shortest tenor amid lukewarm demand. Rates of six-month and one-year papers moved sideways and were at 6.294% and 6.55%, respectively.

Meanwhile, traders expect the yield on the 10-year bonds to decline, with one saying the papers will fetch a rate between 7% and 7.2%.

The Treasury fully awarded the reissued 10-year papers when they were last offered on Nov. 6, borrowing P15 billion as planned versus total bids totalling P28.306 billion. It fetched an average rate of 8.035%, higher than the 6.35% yield in May.

“For the [bonds], most likely it will be around 7% to 7.1%. But it may change depending on the [inflation] data,” another trader said in a text message.

Inflation likely slowed in November from a nine-year peak driven by cheaper oil and improved food supply, analysts said in a BusinessWorld poll.

The survey among 14 economists yielded a 6.3% median forecast for the month, slower than the actual 6.7% figure in September and October. The median also falls within the 5.8-6.6% estimate range of the Bangko Sentral ng Pilipinas.

November inflation data will be released by the Philippine Statistics Authority on Wednesday.

“The inflation forecasts are [slower], [with the] central bank’s November forecast was at 5.8-6.6% based on oil being lower,” the first trader said, adding that the market will also price in the “dovish” remarks of US Federal Reserve Chair Jerome Powell last week, wherein he said interest rates are now closer towards a neutral rate. •