RATES OF THE Treasury bills (T-bill) on offer today will likely move sideways as market players anticipate a possible retail Treasury bond (RTB) sale.
The Bureau of the Treasury (BTr) 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.
A trader interviewed before the weekend said rates of the T-bills on offer will likely move sideways from the previous auction.
Last week, the Treasury fully awarded the T-bills it placed on the auction block, borrowing P20 billion as planned out of tenders totalling P30.316 billion.
At that offering, the 91-, 182- and 364-day papers fetched slightly higher rates from the previous offering, settling at 5.55%, 5.933% and 5.983%, respectively.
Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.508%, 5.896% and 6.119%, respectively, on Friday.
“For the T-bills auction on Monday, we’re only expecting sideways movement as we’re still waiting for fresh catalysts like the possible RTB and other news from abroad,” the trader said in a phone interview Friday.
National Treasurer Rosalia V. De Leon told reporters last week that the government is looking at issuing RTBs, even as she described the state’s current cash position as “very healthy.”
“We have to take into consideration other things before we confirm that we’re going to have RTB sale because of that huge maturity,” Ms. De Leon said.
RTBs are issued to the general investing public. Before the public sale of the bonds, the instruments will be first offered to eligible financial institutions at a rate-setting auction.
The government is considering the sale of RTBs in time for the passage of the 2019 national budget and amid speculation of a possible cut in bank reserve requirements.
Asked for the tenor of the possible retail bond issuance, Ms. De Leon said that the BTr is “looking at the belly of the curve.”
“The T-bill rates should be lower by five basis points on lack of news regarding RTB,” another trader said in a text message on Friday, noting that the Treasury will pay P70-billion worth of maturities on Tuesday.
Apart from the retail bond sale, the Treasury is also studying an offer of renminbi-denominated or “panda” bonds in the second quarter as well as yen-denominated or “samurai” bonds in the following quarter, in accordance with the government’s 12-month cycle of offshore bond offerings.
For this quarter, the government is planning to borrow P360 billion. Some P240 billion will be borrowed this quarter through 12 weekly T-bill auctions. On the other hand, P120 billion worth of T-bonds will also be issued through six fortnightly auctions. — Karl Angelo N. Vidal

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