T-bill rates to end mixed ahead of RTB offer’s end

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Bureau of Treasury (BoT)

RATES OF Treasury bills (T-bill) on offer today will likely end mixed as market players await the final result of the retail Treasury bond (RTB) sale.

The Bureau of the Treasury (BTr) is offering P20 billion worth of T-bills on Monday, broken down into P6 billion each for the three- and six-month papers and another P8 billion for the one-year instruments.

A trader said rates of the T-bills on offer will likely move sideways or 10 basis points (bp) higher from the previous auction.

The government made a partial award of the T-bills it offered last Feb. 18, borrowing only P15.598 billion out of tenders totalling P28.862 billion. Yields picked up across all tenors, with the 91-, 182- and 364-day papers fetching rates of 5.733%, 5.978% and 6.052%, respectively.

Meanwhile, at the secondary market on Friday, the three-month, six-month, and one-year papers fetched yields of 5.57%, 5.888%, and 6.06%, according to the PHP Bloomberg Valuation Service Reference Rates as of March 1 published on the Philippine Dealing System’s website.

“I’m expecting sideways movement to 10 bps higher. Nothing much happening since everyone is waiting for the RTB results,” the trader said.

The government is offering RTBs to the general investing public, which can be bought in denominations of P5,000 until March 6.

The five-year bonds carry a coupon of 6.25% and will mature in 2024. The instruments can be bought through 21 authorized financial institutions, as well as online through Land Bank of the Philippines and Development Bank of the Philippines.

National Treasurer Rosalia V. De Leon said demand for the RTBs could reach as high as P200 billion by the end of the public offer period, although the government may not accept all the bids.

The trader added that demand for the T-bills may be captured by the ongoing RTB sale.

“That’s why we are expecting yields to go higher,” the trader said, adding that investors are also looking ahead to the domestic inflation data to be released tomorrow.

Inflation may have eased further in February on the back of lower costs of food, particularly rice. A BusinessWorld poll of 13 economists yielded a 4.1% median estimate, slower than the actual 4.4% print in January.

However, another trader said the rates of the T-bills may move sideways or five basis points lower from the previous offer due to pent-up demand for the short-term securities.

“The demand will be driven by the maturities. Every week, there are maturing T-bills. Given that the auctions were suspended [last] week, there will be pent-up demand for the next auction,” the other trader said.

For this quarter, the government is planning to borrow P360 billion from the domestic market. Some P240 billion will be borrowed this quarter through 12 weekly T-bill auctions. On the other hand, P120 billion worth of T-bonds will also be issued through six fortnightly auctions. — Karl Angelo N. Vidal