Connect with us

Hi, what are you looking for?

News

Rates of Treasury bills, bonds to rise on faster Oct. inflation

RATES of government securities on offer this week may climb due to faster inflation in October and hawkish signals from the Bangko Sentral ng Pilipinas (BSP).

The Bureau of the Treasury (BTr) will auction off P15 billion in Treasury bills (T-bills) on Monday, made up of P5 billion each in 91-, 182-, and 364-day debt papers.

On Tuesday, the BTr will offer P35 billion in reissued 20-year Treasury bonds (T-bonds) that have a remaining life of four years and 10 months.

A trader expects T-bill rates to rise by 25 basis points (bps) if awarded, while the 20-year bond’s average yield could range between 7% and 7.125%.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that rates may move higher after headline inflation reached a fresh peak in October.

“T-bill and T-bond auction yields could go up after the latest signals that local policy rates could go up by 75 bps on the next rate-setting meeting and could match further Federal Reserve rate hikes if inflation remains high,” Mr. Ricafort added.

Analysts from UnionBank Economics Research said in a report there could be bargain hunting and consolidation in the bond market this week as investors cut losses amid higher inflation and rate hike fears.

Headline inflation quickened 7.7% in October, its fastest pace in almost 14 years, due to higher food prices following recent typhoons, the Philippine Statistics Authority reported on Friday.

This climbed from the 6.9% print in September and 4% in October 2021, and was the fastest in nearly 14 years or since the 7.8% seen in December 2008 during the global financial crisis.

For the first 10 months, inflation averaged 5.4%, faster than 4% a year ago and the BSP’s 2-4% target. Still, this was lower than the central bank’s 5.6% forecast for the year.

BSP Governor Felipe M. Medalla on Thursday said the Monetary Board will raise benchmark interest rates by 75 bps at its Nov. 17 meeting to match the Fed as it seeks to stabilize prices. The central bank has raised rates by 225 bps since May.

The US central bank delivered a fourth straight 75-bp rate hike on Wednesday to combat rising inflation, bringing total increases since March to 375 bps.

At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 3.8559%, 4.5504%, and 4.8684%, respectively, based on the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.

Meanwhile, the 20-year bond fetched a rate of 7.5477%, while the five-year paper, the tenor closest to the remaining life of the bonds on offer on Tuesday, was quoted at 6.8388%.

Last week, the government rejected all bids for its offer of T-bills even as total tenders reached P16.085 billion, slightly higher than the P15-billion program.

Broken down, the BTr rejected all offers for the 91-day T-bills, even with total bids reaching P8.485 billion, above the P5-billion program. Had the Treasury made a full award, the average rate of the tenor would have gone up by 245 bps to 4.768% from the 2.318% seen on Sept. 5, the last successful award of the tenor.

The Treasury also turned down all bids for the 182-day securities as tenders reached only P4.93 billion versus the P5-billion plan. If fully awarded, the average rate of the six-month T-bill would have climbed by 132.6 bps to 5.284% from the 3.958% quoted for the last successful award on Sept. 26.

Lastly, the BTr did not award any 364-day debt papers, as demand for the tenor reached just P2.67 billion, lower than the programmed P5 billion. Had the government accepted these bids, the average rate of the tenor would have increased by 201.6 bps to 5.798% from 3.782% fetched for the last successful award on Aug. 22.

Meanwhile, the reissued 20-year bonds to be offered on Tuesday were first issued on Sept. 6, 2007 with an 8.625% coupon rate.

The Treasury plans to raise P215 billion from the domestic market in November, or P140 billion through T-bills and P75 billion from T-bonds.

The government borrows from local and external sources to help plug a budget deficit capped at 7.6% of gross domestic product this year. — Luisa Maria Jacinta C. Jocson

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

Data is becoming the lifeline of businesses today. Organizations are beginning to realize that they have to know how to store and manage data...

News

Five-dollar bills are inspected at the Bureau of Engraving and Printing in Washington, D.C., March 26, 2015. — REUTERS THE PHILIPPINES’ dollar reserves dipped...

News

Families enjoy taking pictures around Luneta Park in Manila, Nov. 28. Economic managers are targeting 6.5-7.5% gross domestic product growth this year, and 6-7%...

News

Students attend a cooking class at the Technical Education, Skills and Development Authority (TESDA) training school in Taguig City, March 23. — PHILIPPINE STAR/...

News

Filipino fans attend K-pop group NCT 127’s concert at the SM Mall of Asia in Pasay City, Sept. 2. Aside from NCT 127, many...

News

SAM WORTHINGTON in Avatar: The Way of Water LONDON — Filmmaker James Cameron is taking audiences back to his visually mesmerizing world of Pandora,...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.