Treasury bills to fetch flat rates

YIELDS on Treasury bills (T-bills) on offer today are likely to move sideways as market players are expected to park their funds in the shorter end of the curve.

The Bureau of the Treasury (BTr) plans to raise as much as P20 billion from the short-tenored securities today, broken down into a P9-billion offering for three-month debt papers, a P6-billion offering for six-month bills, and P5 billion for the one-year papers.

A trader said over the phone on Friday that demand for the T-bills on offer is expected to be strong amid appetite for short tenors.

“Definitely there would be a demand. I’m seeing aggressive buying, especially on the shorter end, because where would you park your funds?” the trader said, adding that bids for the longer tenors have a tendency of being rejected.

Last week, the government rejected all bids for the fresh 10-year Treasury bonds it wanted to auction off as banks placed bids too high for the state.

The auction last week was the fifth consecutive time that the government rejected all bids after the success of the 20th issuance of retail Treasury bonds, which was offered in late November last year.

“If you noticed, the ones being rejected are on the bonds side. Kasi medyo mataas yung demand sa yields (Because the yields demanded by banks are high) given the tenor,” the trader added.

Meanwhile, another trader said yields will be flat or even go down by five basis points amid the expected rate hikes from the US Federal Reserve later this year.

The Bangko Sentral ng Pilipinas is also expected to hike interest rates twice in 2018.

The Treasury plans to auction off P120 billion worth of Treasury bills and another P120 billion worth of Treasury bonds in the January to March period. This is higher than the P200 billion it offered in the last quarter of 2017.

The government borrows from local and foreign sources to fund its budget deficit, which for this year is capped at 3% of the country’s gross domestic product.

The government targets a P888.23-billion gross borrowing plan this year, 22.05% higher than last year.

Of this amount, P176.27 billion will be from external financing while P711.96 billion will be sourced locally.