RATES OF government securities to be auctioned this week are expected to move sideways following weaker-than-anticipated US jobs data and expectations that inflation picked up last month.

The Bureau of the Treasury (BTr) is looking to raise P15 billion through its offer of Treasury bills (T-bills) on Monday — P5 billion each in 91-, 182- and 364-day debt papers.

It will also auction off P35 billion in reissued seven-year Treasury bonds (T-bonds), which have a remaining life of six years and 11 months.

Two bond traders said T-bill rates could move sideways from their week-ago levels.

For the seven-year T-bonds, the first trader expects its average rate to fall within 3.75% to 3.825%, while the second trader gave a forecast range of 3.85% to 3.95%.

The first trader said the market will take its cue from the US jobs data reported on Friday, as well as the August inflation report, which will be released by the Philippine Statistics Authority on Sept. 7.

US Labor department data showed nonfarm payrolls increased by 235,000 last month, its smallest rise since January, Reuters reported. This was also softer than the 750,000 new jobs expected by analysts in a Reuters poll.

Meanwhile, a BusinessWorld poll of 16 analysts yielded a median estimate of 4.4% for August inflation. If realized, headline inflation will again go beyond the central bank’s 2-4% target following the 4% print in July and will be faster than the 2.4% logged in August 2020.

Economists said the weaker peso and its impact on import prices likely resulted to a faster increase in the consumer price index last month.

The Treasury last week raised P15 billion as programmed via its offer of T-bills as demand reached P55.185 billion.

Broken down, it made a full P5-billion award of the three-month securities as demand for the tenor reached P15.584 billion. The average rate for the 91-day T-bills stood at 1.077%, steady from the previous auction.

The BTr likewise borrowed P5 billion as planned via the 182-day T-bills as tenders hit P22.646 billion. The average rate of the six-month papers slipped by 0.3 basis point (bp) to 1.405% from the 1.408% quoted the prior week.

Lastly, the Treasury raised the programmed P5 billion from its offering of 364-day securities, which attracted bids worth P16.955 billion. The average rate of the one-year debt papers increased by 0.4 bp to 1.616% from 1.612% previously.

Meanwhile, the last time the Treasury offered the reissued seven-year papers on the auction block on Tuesday was on Aug. 10, when it made a full award of the fresh bonds as its rate fell within market expectations, even as investors remained concerned over the impact of the ongoing lockdown on economic growth.

The BTr raised P35 billion as planned via the fresh seven-year T-bonds at that auction as total tenders reached P63.696 billion, or nearly twice as much as the offer volume. The seven-year papers fetched a coupon rate of 3.75%.

At the secondary market on Friday, the 91- 182- and 364-day T-bills fetched yields of 1.1479%, 1.4187%, and 1.6322%, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website. Meanwhile, the seven-year bond was quoted at 3.5935%.

The Treasury is looking to raise P250 billion from the local market this month: P75 billion via weekly offers of T-bills and P175 billion from weekly auctions of T-bonds.

The government wants to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product. — LWTN with Reuters