YIELDS ON Treasury bills (T-bill) on offer today are seen to move sideways as investors await local economic data to be released later this week.
The Bureau of the Treasury is offering P15 billion worth of Treasury bills today. Broken down, the Treasury plans to raise P4 billion and P5 billion through the three-and six-month papers, respectively, and another P6 billion in one-year T-bills.
Traders interviewed on Friday said rates on T-bills will likely move sideways at Monday’s auction.
“For the 91-day bills, we’re seeing sideways movement or even five basis points (bp) lower from the previous auction,” a trader said in a phone interview.
The trader added rates for the 182- and 364-day papers might climb five basis points from last week’s auction.
The government fully awarded the T-bills it offered on July 30, borrowing P15 billion as planned, with total tenders amounting to P35.8 billion.
Rates of the three-month, six-month and one-year notes climbed to 3.261%, 4.294%, and 4.9%, respectively.
At the secondary market on Friday, the 91-day T-bill was quoted at 3.2409% while the 182-day papers fetched 4.2014%. The 364-day securities closed at 4.8685%.
The trader also expects the P15 billion to be oversubscribed by 1.5 times as market players wait for inflation and gross domestic product growth data, as well as the monetary policy decision of the Bangko Sentral ng Pilipinas (BSP) later this week.
“The market is on a wait-and-see mode because of the heavy economic data to be released,” she said. We’ll wait for the inflation as well as the [Monetary Board] meeting.”
The central bank is widely expected to tighten its monetary policy at its meeting on Thursday, according to 14 economists polled by BusinessWorld. Six of the analysts said a 50-bp hike would be announced by the Monetary Board at this week’s review, while the rest see a 25-bp increase on the table.
The trader added that the magnitude of the interest rate hike will affect the market.
“Most of the market players are expecting for a 50bp hike from the BSP, such that the peso rallied a bit the past few days. If we see a hike less than expected, we might see some selling pressure on the peso which will affect the price of the Treasury bills.”
The central bank has been signalling at an interest rate hike during its monetary policy meeting on Thursday as it seeks to quell inflation expectations.
Last month, BSP Governor Nestor A. Espenilla said the monetary authority is “ready to follow through” on the two 25-bp rate hikes it implemented in May and June to secure its inflation targets.
The Treasury is set to raise P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal

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