RATES OF THE Treasury bills (T-bill) on offer today will likely end mixed as market participants await the first policy meeting of the US central bank.
The Bureau of the Treasury is offering P20 billion worth of T-bills on Monday, broken down into P6 billion each for the three- and six-month papers and another P8 billion for the one-year instruments.
Bond traders interviewed before the weekend said yields on the 182- and 364- securities on auction will likely decline from the previous offering, while the rate of the shortest tenor is seen to move sideways or end flat.
“The rate of the 91-day bills will move sideways. Then, the 182- and 364-day [papers] will fetch rates 5-10 basis points (bps) lower from the previous auction,” a trader said on Friday.
Last week, the Treasury borrowed just P16.347 billion out of the P20 billion it intended to raise at its T-bills auction, partially awarding the shortest tenor amid tepid demand as market participants sought to park their funds in the longer-dated securities.
The 91-, 182- and 364-day papers fetched 5.418%, 5.914% and 5.969%, respectively, at that offering.
Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.473%, 6.004% and 6.069%, respectively, on Friday.
Another trader said rates of 182- and 364-day papers will be 10 bps lower from the previous offer as market participants are ahead to the US Federal Reserve policy meeting on Jan. 29-30.
The US central bank is expected to keep rates steady during the Federal Open Market Committee’s meeting. The Fed has signaled it will raise its benchmark rates twice this year, although some central bank officials indicated that they will be patient in tightening borrowing costs.
“It’s pretty much discounted what the Fed will do. What’s crucial about the meeting is what Fed Chair (Jerome) Powell would say during the press conference following the meeting,” the trader said in a phone interview.
The trader added that the market will also price in Philippine gross domestic product (GDP) growth data released last week.
The economy grew at a 6.2% pace in 2018, missing the already downgraded 6.5-6.9% growth target band of the government, as elevated inflation slowed consumer spending.
Meanwhile, fourth-quarter GDP growth stood at 6.1%, slightly faster than the revised six percent growth in the previous quarter, but still slower than the 6.5% pace in the same quarter in 2017.
“The recent GDP data is supportive of a lower interest rate. Or the BSP (Bangko Sentral ng Pilipinas) would basically [hold its interest rates] on their Feb. 7 meeting,” the trader added.
The government plans to raise P360 billion this quarter through domestic means. Some P240 billion will be borrowed through 12 weekly T-bill auctions during the three-month period, while P120 billion worth of T-bonds will also be issued through six fortnightly auctions.
The state wants to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the remainder will be from foreign creditors.
However, the 2019 national budget has yet to be passed by Congress and signed into law, leaving the fiscal program hanging so far. — Karl Angelo N. Vidal

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