Rates of T-bills, bonds to track secondary market

RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be offered this week could end mixed as players await the release of December inflation data.

The Bureau of the Treasury (BTr) will auction off P27 billion in T-bills on Monday, or P9 billion each in 91-, 182-, and 364-day papers.

On Tuesday, the government is targeting to raise up to P50 billion from a dual-tenor T-bond offering, as it could borrow between P20 billion and P30 billion each in reissued seven-year papers with a remaining life of two years and seven months and via reissued 10-year debt with a remaining life of nine years and three months.

Yields on T-bills and T-bonds could rise slightly this week and mostly track secondary market rates amid some consolidation as there have been no auctions since early December, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The next catalyst for the market will be the Philippine consumer price index (CPI) report to be released this week, he added.

“The GS (government securities) market was still sluggish to start the year. Levels were just flat to a basis point (bp) lower despite offers being heavy for most of the day,” a trader said in an e-mail.

The trader expects the seven- and 10-year T-bonds to fetch average rates ranging from 5.45% to 5.5% and 6% to 6.025%, respectively.

At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills went up by 1.13 bps, 0.44 bp, and 0.58 bp week on week to end at 4.8547%, 4.9769%, and 5.0375%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 2 published on the Philippine Dealing System’s website.

For its part, the seven-year bond rose by 5.26 bps week on week to close at 5.9409%, while the three-year debt, the tenor closest to the remaining life of the papers on offer this week, increased by 1.59 bps to 5.5143%.

Meanwhile, the 10-year rate inched down by 0.22 bp week on week to end at 6.0517%.

The Bangko Sentral ng Pilipinas (BSP) said headline inflation could have settled within the 1.2%-2% range in December, slowing from the 2.9% clip seen in the same month a year ago.

At 2% or the upper end of the forecast, inflation may have picked up from 1.5% in November and would be the fastest clip in 10 months or since the 2.1% clip in February. It would likewise mark the first time in 10 months that inflation returned to the BSP’s 2%-4% annual target.

Meanwhile, at the bottom end of the forecast, inflation would have eased to its slowest pace in five months or since the 0.9% in July.

The Philippine Statistics Authority will release the December CPI data on Jan. 6 (Tuesday).

During its last T-bill auction for 2025 held on Dec. 15, the BTr raised P20 billion as planned via the T-bills it placed on the auction block as the offer was more than four times oversubscribed, with total tenders reaching P87.456 billion.

Broken down, the government raised P6 billion as planned from the 91-day T-bills as demand for the tenor reached P30.985 billion. The three-month paper fetched an average rate of 4.731%, down by 2.8 bps from the previous auction. Yields accepted were from 4.709 to 4.779%.

The Treasury also made a full P7-billion award of the 182-day debt as bids hit P28.9 billion. The average rate of the six-month T-bill rose by 3 bps to 4.903% from the previous week. Tenders awarded carried yields from 4.848% to 4.943%.

The BTr likewise sold the programmed P7 billion in 364-day securities as the tenor attracted bids totaling P27.571 billion. The one-year paper’s average yield was at 4.924%, declining by 3.8 bps. Accepted rates were from 4.91% to 4.924%.

Meanwhile, the Treasury last auctioned off the reissued seven-year bonds on offer this week on April 19, 2022, where the government borrowed P35 billion as planned at an average rate of 5.779%, well above the 3.75% coupon rate.

On the other hand, the reissued 10-year T-bond was last auctioned off on Dec. 2, where the government raised P15 billion as planned at an average rate of 5.876%, above the 6.375% coupon.

The Treasury is looking to raise P268 billion from the domestic market this month, or P106 billion in T-bills and P160 billion in T-bonds. — A.M.C. Sy