RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be auctioned off this week may decline to track the broad rally seen at the secondary market in the past few days amid US President Donald J. Trump’s soft tariff stance on China and remarks urging the US Federal Reserve to continue cutting rates.

The Bureau of the Treasury (BTr) will auction off P22 billion in T-bills on Monday, or P7 billion each in 91- and 182-day papers and P8 billion in 364-day papers.

On Tuesday, the government is looking to raise P35 billion via two T-bond tenors. Broken down, it will offer P15 billion in reissued seven-year bonds with a remaining life of three years and two months, and P20 billion in new 25-year papers.

Auction yields could mirror the week-on-week declines seen for their corresponding secondary market benchmarks following Mr. Trump’s comments on further Fed interest rate cuts, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“The market reacted positively to the latest news of Trump’s tariff plans on China and his support for lowering the policy rate,” a trader likewise said in an e-mail.

The reissued seven-year bonds could see “healthy” demand and fetch rates ranging from 5.85% to 5.95%, the trader added.

At the secondary market on Friday, yields on the 91-, 182-, and 364-day T-bills went down by 18.51 basis points (bps), 5.44 bps, and 4.87 bps to end at 5.3122%, 5.5721% and 5.8467%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of Jan. 24 published on the Philippine Dealing System’s website.

The rate of the seven-year bond went down by 2.64 bps week on week to 6.2452%, while the three-year paper, or the tenor closest to the remaining life of the reissued bonds to be offered on Tuesday, decreased by 8.06 bps to yield 5.985%.

Meanwhile, the 25-year bond rose by 4.23 bps week on week to fetch 6.4342%.

In a Fox News interview, Mr. Trump said he would rather not use tariffs against China and that a phone call with Chinese President Xi Jinping the prior week was friendly, Reuters reported.

Meanwhile, Mr. Trump on Thursday said he wants the Federal Reserve to cut interest rates at a time the central bank has hit pause for an uncertain duration, arguing he understands monetary policy better than those charged with setting it.

“With oil prices going down, I’ll demand that interest rates drop immediately, and likewise they should be dropping all over the world,” Mr. Trump told the World Economic Forum on Thursday in Davos, Switzerland.

At a White House event following those comments, Mr. Trump said, “I think I know interest rates much better than they do, and I think I know it certainly much better than the one who’s primarily in charge of making that decision,” in an apparent reference to Federal Reserve Chairman Jerome H. Powell, who Mr. Trump appointed as Fed leader in his first stint as president.

The Fed last cut its overnight interest rate target by a quarter percentage point at its December policy meeting to between 4.25% and 4.5%.

For all of 2024, the Fed lowered rates by a full percentage point amid easing inflation pressures and a sense among Fed officials that they wanted monetary policy to exert less restraint on the economy’s momentum. The December meeting also saw officials trim estimates of cuts in 2025 amid expectations of higher levels of inflation and slightly better growth.

Mr. Ricafort added that the T-bills and T-bonds to be offered this week could fetch lower rates after the Philippine government last week raised $3.3 billion from its offerings of US dollar and euro bonds.

Broken down, the government borrowed a total of $2.25 billion from its offer of dual-tenor US dollar-denominated bonds, which consisted of 10-year papers and 25-year sustainability debt.

Meanwhile, it raised €1 billion via seven-year euro-denominated sustainability bonds.

Last week, the government borrowed P27.6 billion from the T-bills it auctioned off, higher than the initial P22-billion plan, as total bids reached P93.89 billion, more than four times the amount on offer.

Meanwhile, the reissued seven-year bonds to be auctioned off on Tuesday were last offered on July 27, 2021, where the government raised P35 billion as planned at an average rate of 3.651%, lower than the 3.625% coupon.

The BTr plans to raise P213 billion from the domestic market this month, or P88 billion via T-bills and P125 billion through T-bonds.

The government borrows from local and offshore sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — AMCS with Reuters

EAST WEST Banking Corp. (EastWest Bank) is looking to tap the domestic bond market this semester to diversify its funding sources.

“The plans this year are focused on the peso bonds. So, we are looking at issuing one within the year,” EastWest Bank Senior Executive Vice-President and Financial Markets and Wealth Management Cluster Head Rafael S. Algarra, Jr. said in a media roundtable on Thursday. “We’re still thinking that we should be able to issue in the first half of the year.”

Key considerations for the timing of the issuance are the pace of monetary easing here and abroad and the expected surge in corporate bond offers this year amid lower borrowing costs, Mr. Algarra said.

“Before the start of the year, we were expecting interest rates would be dropping fast, not only here, but globally. But as you know, there’ll be a slowdown in how interest rates will be falling, so we’ll take that into consideration,” he said.

“There will be a lot of issuances this year because there was a lot of pent-up demand last year because companies found the rates high. So, this year, with rates falling, we’ll probably have a lot of issuances from not only banks but companies in general.”

Mr. Algarra added that the bank also plans to issue dollar-denominated bonds once it completes its offer of peso debt.

“You don’t want to compete with everybody else’s issuance. But we expect to issue [peso bonds] this year, barring any significant change in the market environment, and after that, we’ll probably continue to look at the dollar bond. That’s something that we’ve already discussed. But again, it’s something that is in the pipeline, but we haven’t really finalized yet. But definitely, after we finish the issuance of the peso bonds, we’ll be looking at the viability of issuing a dollar bond and the timing, of course,” he said.

“Right now, we have a lot of cash. But it’s still good to issue some bonds from that perspective. Liquidity-wise, we’re quite flush with funds at the moment. I think a lot of banks are, as well. But of course, we have an aggressive growth target. So, you have to manage your balance sheet accordingly,” Mr. Algarra added.

The bank’s loans are expected to grow by 25% this year, he said, steady from the 2024 level, driven by demand for its consumer products.

“We’re quite bullish on credit card, auto loan, and even personal loan. Mortgage, not so much because there’s an overhang of property supply at the moment,” Mr. Algarra said.

“I think the one thing interesting this coming year is the emergence of Chinese brands. The auto exports of China have now gone past Japan’s in 2024… It tells us that Chinese brands will probably have a lot of supply and demand this year. I think you can feel that there’s an increase, but you still have to be very selective because there are a lot of brands to choose from,” he said.

WEALTH MANAGEMENT BOOST
Meanwhile, EastWest Bank’s wealth management segment’s assets under management (AUM) are likely to expand by 20-25% this year, steady from the expected growth in 2024, as the lender targets the transitioning middle class.

“The Philippines continues to grow and that means a lot of investable funds, especially in the middle class, which are moving into the upper middle-income [bracket],” Mr. Algarra told BusinessWorld on the sidelines of the roundtable.

He added that EastWest Priority is looking to tap the affluent segment in areas outside of Metro Manila.

“Our focus is really to grow our AUMs. We are focusing a lot of our effort outside NCR (National Capital Region), outside Metro Manila,” EastWest Bank Chief Investment Officer Bede Lovell S. Gomez likewise said at the same event.

About 80-85% of EastWest Priority’s current client base is in the NCR, Mr. Gomez said.

“We have to grow the balance, so we have as much as possible to grow. I think there’s a lot of untapped growth outside Metro Manila. The multiplier effect of income capacity and untapped funds are still underserved. And it’s growing fast — probably growing faster than Metro Manila,” he added.

He added that other lenders are likewise targeting this segment.

“It’s impossible that we’re the only one who knows that, so we’re competing for that market,” Mr. Gomez said.

EastWest Bank’s attributable net income jumped by 49.1% to P2.32 billion in the third quarter of 2024, bringing its nine-month profit to P5.81 billion, up by 19.57% year on year.

The bank’s shares went up by two centavos or 0.2% to close at P10.04 each on Friday. — Aaron Michael C. Sy