T-bill, bond rates may be mixed on inflation bets

RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) may be mixed this week, tracking secondary market yields amid increased liquidity in the financial system, and amid expectations of faster February inflation.

The Bureau of the Treasury (BTr) will auction off P15 billion in T-bills on Monday, or P5 billion each in 91-, 182-, and 364-day papers.

On Tuesday, it will offer P30 billion in reissued seven-year Tbonds with a remaining life of six years and 10 months.

T-bill and T-bond rates may track the mixed movements of secondary market yields last week, which came amid increased market liquidity amid maturing issuances, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“This whole trading week was basically quiet as the market was overwhelmed by the overshooting of the five-year RTB (retail Treasury bonds) target, paired with the BTr’s borrowing schedule revision for March,” a trader said in an e-mail.

At the secondary market on Friday, the rates of the 91- and 182-day T-bill rates went up by 10.66 basis points (bps) and 5.3 bps week on week to end at 5.7292%, 5.9575%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data published on the Philippine Dealing System’s website. Meanwhile, the 364-day T-bill rate went down by 2.35 bps to end at 6.1088%.

The seven-year bond inched down by 2.87 bps week on week to 6.2327%.

Meanwhile, the government raised a record P584.86 billion from its offering of five-year retail bonds, exceeding the P400-billion target mentioned by BTr Officerin-Charge Sharon P. Almanza. The RTBs fetched a coupon rate of 6.25% and were issued on Wednesday.

On the other hand, the BTr last week revised its borrowing schedule for March to offer longer Tbond tenors.

The BTr is now looking to raise P30 billion from seven-year Tbonds on March 5, via 10-year papers on March 12, through 20year bonds on March 19, and from six-year debt on March 26.

It previously planned to raise P30 billion from three-year Tbonds on March 5, via five-year papers on March 12, from seven-year bonds on March 19, and through 10-year securities on March 26.

The average rate of the sevenyear bonds on offer this week will depend on February inflation data, the trader added.

“The seven-year bond for auction [this] week will be interesting and could tip over the fragile long ends if it gets awarded beyond 6.3%. Initial indication is between 6.25% and 6.35%,” the trader said.

A BusinessWorld poll of 16 analysts conducted last week yielded a median estimate of 3% for the February consumer price index (CPI), within the 2.8-3.6% forecast of the Bangko Sentral ng Pilipinas (BSP) for the month.

If realized, February inflation would be faster than the 2.8% in January but slower than 8.6% in the same month a year ago. This would mark the third straight month that CPI was within the BSP’s 2-4% annual target. —