THE RATES on the Treasury bills (T-bills) on offer today may inch lower amid continued appetite for short-term papers, with investors seen searching for higher returns on longer tenors amid falling interest rates.

The Bureau of the Treasury (BTr) is looking to raise P20 billion via T-bills on Monday: P6 billion each for the 91- and 182-day papers and P8 billion for 364-day securities.

A bond trader said on Friday that “yields for the T-bills auction might move sideways with a downward bias as it seems like appetite for T-bills has lessened,” with rates on three- and six-month papers seen moving sideways and a decline of five basis points (bps) seen for the yield on one-year securities.

Another bond trader, however, said rates may go down by five to 10 bps as investors continue to “crowd short-term papers amid growing concerns about the global economic impact of the coronavirus.”

“US yields also trading at lows after the US Fed delivered a 50-bp emergency cut last week to combat the virus,” the second trader said in a Viber message on Sunday.

Offshore, yields on the 10-year US Treasuries were below the one-percent level at 0.74%, while the 30-year tenor was quoted at 1.25% as of March 6, according to the US Treasury’s website.

During the T-bills auction last week, the government upsized the volume it accepted to P23.2 billion from its initial P20-billion offer amid total bids of P60.4 billion.

Broken down, it fully awarded P6 billion in 91-day T-bills out of total tenders worth P12.813 billion. The average rate for three-month papers inched up by one basis point to 3.013% from the 3.003% fetched in the previous auction on Feb. 24.

Another P6 billion was raised as planned via the 182-day papers at an average rate of 3.324%, down by 4.1 bps from the previous yield of 3.365%.

For the 364-day T-bills, the BTr upsized the award to P11.2 billion from the original P8-billion program as total tenders for the tenor reached P33.06 billion. The one-year securities fetched a lower average rate of 3.684% against the 3.787% quoted previously.

At the secondary market on Friday, the 91-, 182- and 364-day T-bills fetched rates of 3.058%, 3.367% and 3.719%, respectively.

The trader said appetite for shorter tenors might decline as “traders and investors want to lock in higher interest rates for longer periods as interest rates are falling.”

The BTr made full awards of the government securities it offered for the past auctions, even opening its tap facility amid lower rates.

The first trader said yield movements might change amid developments in the coronavirus disease 2019 (COVID-19) outbreak, as the situation is very fluid.

The Department of Health (DoH) reported on Saturday the first case of local transmission in the country after records showed the fifth person to have officially contracted the disease does not have recent travel history outside the Philippines.

The total number of confirmed cases in the country were at six as of Saturday evening.

The DoH also raised its alert system for the disease to code red sub-level one on Saturday as a “preemptive call” to ensure that both national and local governments as well as all health care providers could prepare in case suspected and confirmed cases will rise further.

The administration’s economic team is set to meet on Tuesday to asses the potential impact of COVID-19 on the economy and various sectors.

The Treasury has set a P420-billion local borrowing program this quarter, broken down into P240 billion in T-bills and P180 billion via Treasury bonds.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Beatrice M. Laforga