TREASURY BILLS (T-bills) on offer this week may fetch higher yields across the board, following a spike in long-term US Treasury yields.
The government plans to raise as much as P20 billion in this week’s auction of T-bills’ P8 billion in 91-day debt papers, P6 billion in 182-day notes; and P6 billion in 364-day papers.
Traders interviewed yesterday said Thursday’s auction may see higher yields, with a trader saying it might climb up to 10 basis points (bps), as US government debt yields went up last Friday.
The yield on the benchmark 10-year Treasury note rose 5.5 bps to 2.3966%, while the two-year and 30-year tenors went up 2.5 and 6.3 bps to 1.6582% and 2.8797%, respectively. Bond yields move inversely to prices.
At the secondary market on Monday afternoon, yields on the one-year notes is at 3.0482%, while papers at the shorter end stood at 2.6704% for the three-month tenor, and 3.0046% for the six-month tenor.
However, another trader noted yields are expected to be flat from the previous auction “due to strong demand on the short tenors.”
“If you are an investor, you will look into short-dated bills so you would not be locked in longer FXTN (fixed rate treasury notes) bonds, rather than locking in on a five- or seven-year bonds,” a trader said.
Traders also said market players are also looking on the “stronger peso,” on the back of mostly upbeat Philippine economic data, as well as weakening US fundamentals.
Moreover, the papers will likely be fully subscribed, with a trader noting that it may be oversubscribed by 1.5 times.
The Philippine government is looking to borrow up to P727.64 billion this year, higher than the P631.294-billion previously programmed to reflect the planned surge in public spending. A fifth of these loans will be sourced abroad, with the amounts expected to support the government’s infrastructure spending goals. — Karl Angelo N. Vidal