Rates of T-bills, T-bonds seen to move sideways ahead of inflation data

THE RATES of government securities on offer this week are likely to move sideways as investors stay on the sidelines while waiting for the April inflation data.

The Bureau of the Treasury (BTr) is set to borrow P25 billion via the Treasury bills (T-bills) on Monday, broken down into P5 billion in 91-day debt, P8 billion in 182-day papers and P12 billion from 364-day securities.

On Tuesday, the BTr will offer P35 billion of five-year reissued Treasury bonds (T-bonds) with a remaining life of four years and 11 months. The bonds have a coupon of 3.375%.

Two bond traders said T-bill rates might move sideways or inch down by up to 5 basis points (bps), ahead of the release of the inflation data.

The Philippine Statistics Authority will report on Wednesday, May 5, the consumer price index data for the month of April.

Analysts said headline inflation could have accelerated again last month to go beyond the annual target for the fourth consecutive month, due to high food and transport prices.

A BusinessWorld poll last week of 17 analysts yielded a median estimate of 4.7%, nearer the upper end of the 4.2% to 5% estimate given by the Bangko Sentral ng Pilipinas (BSP) for the month. If realized, this will be faster than the 4.5% print in March.

Analysts attributed the expected faster inflation to high cost of pork products following the expiration of the price cap of the government, coupled with elevated transport costs due to the continued increase in oil prices.

Meanwhile, the first trader said the five-year T-bonds could “enjoy demand on yield pickup” on Tuesday, with the average rate hovering around 3.25-3.35%. The second bond trader gave a slightly higher forecast range of 3.3-3.4%.

The BTr made a full P25-billion award and even accepted P5 billion more via the tap facility during its previous T-bill auction last week. The exercise saw total bids reach P71.596 billion, nearly thrice as much as the initial offer.

Broken down, it raised P5 billion as planned via the 91-day papers, at a slightly higher average rate of 1.369% against the 1.349% quoted on March 19.

It also awarded the programmed P8 billion in 182-day debt. The average yield of the six-month papers inched up to 1.714% from 1.713% in the previous auction.

Lastly, the Treasury made a full P10-billion award of the 364-day securities it offered, with the average rate edging down to 1.88% from 1.884%.

Meanwhile, the last time the BTr auctioned off five-year bonds was on April 6 when it made a maiden offering of the series raising P35 billion at a coupon of 3.375%.

At the secondary market on Friday, the 91-, 182- and 364-day papers were quoted at 1.346%, 1.644%, and 1.882%, respectively, while that of the five-year tenor ended at 3.231%, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The BTr plans to raise P170 billion from the local bond market this month: P100 billion via the weekly offering of T-bills and P70 billion in T-bonds to be auctioned off fortnightly.

The government is looking to borrow P3 trillion this year from domestic and external sources to help fund a budget deficit seen to hit 8.9% of gross domestic product. — Beatrice M. Laforga