RATES of Treasury bills (T-bills) on offer on Monday will likely go down after Metro Manila and nearby areas were placed under the strictest restriction measures again for one week amid surging virus cases.

The Bureau of the Treasury (BTr) is set to raise P20 billion via the T-bills on Monday, broken down into P5 billion each in 91- and 182-day debt papers and P10 billion in 364-day securities.

A bond trader said the average yields for the short-term debt could drop by 10-15 basis points (bps), while Noel S. Reyes, first vice-president and chief investment officer at Security Bank Corp., expects rates to move sideways or slightly lower.

Kevin S. Palma, peso sovereign debt trader at Robinsons Bank Corp., said the one-week enhanced community quarantine (ECQ) enforced in the so-called “National Capital Region (NCR) Plus bubble” will drive demand for government securities and pull down rates.

“GS yields have bounced off their year-to-date highs taking cue from lower US Treasury yields week on week coupled with strong demand for safe assets locally after the reimposition of ECQ in the nation’s capital,” Mr. Palma said in a Viber message on Sunday.

NCR and Bulacan, Cavite, Laguna, and Rizal will be under strict lockdown starting Monday to April 4 (Sunday), coupled with an 11-hour curfew between 6 p.m. to 5 a.m.

The tighter restrictions mean movement will be limited to essentials only, with operations of most establishments reduced and mass gatherings banned.

President Rodrigo R. Duterte decided to reimpose the strictest lockdown classification after the recent spike in coronavirus disease 2019 (COVID-19) cases in the country. The Health department reported 9,595 new infections on Saturday, bringing the number of active cases to 118,122 so far.

Meanwhile, the yield on the benchmark 10-year US Treasuries inched up to 1.67% on Friday from 1.63% the day before. Week on week, the rate fell by 7 bps from 1.74% on March 19, based on the data posted on the US Treasury’s website.

The BTr made a full award of the T-bills offered last week from P64 billion in total bids, even as rates continued to climb across the board.

Broken down, the Treasury borrowed P5 billion as planned via the 91-day papers, with total tenders reaching P12.572 billion. The three-month papers yielded an average rate of 1.336%, up than the 1.232% fetched during the March 15 auction.

It also raised P5 billion as programmed from the 182-day instruments as the tenor attracted P22.638 billion in bids. The six-month papers’ average yield climbed to 1.718% from 1.527% previously.

Lastly, it made a full P10-billion award of the 364-day T-bills it offered from P28.798 billion in bids. The one-year securities were quoted at an average rate of 1.997%, up from the previous rate of 1.99%.

Security Bank’s Mr. Reyes said the yield curve has flattened in the past two days, which shows the rate of short tenors could ease further while longer tenors will see some recovery.

“This ECQ adds to slower economic recovery and increased uncertainty and favors government securities which have corrected higher in terms of yields in recent weeks,” Mr. Reyes said.

The BTr wants to raise P160 billion from the local bond market this month, broken down into P100 billion in T-bills to be offered weekly and P60 billion via fortnightly auctions of Treasury bonds.

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