Connect with us

Hi, what are you looking for?

News

Treasury bills, bonds seen to fetch higher rates

BW FILE PHOTO

RATES of government securities (GS) on offer this week could rise amid expectations of continued hawkish monetary policy from central banks here and abroad.

The Bureau of the Treasury (BTr) will offer 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 auction off P35 billion in fresh 10-year Treasury bonds (T-bonds).

A trader expects T-bill and T-bond yields to move higher at this week’s auctions as the US Federal Reserve’s rate hike path is seen to remain aggressive.

“It will all depend on US CPI (consumer price index) data on Tuesday night,” the first trader said. “But given what we know so far, still upside bias on yields given a hawkish Fed and ECB (European Central Bank).”

The first trader expects T-bill rates to rise by 10-20 basis points (bps) from the last awarded yields and sees the fresh 10-year paper to be quoted at 6.75% to 7%.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said yields on government securities on offer this week could rise amid a weaker peso, record high outstanding national debt, hawkish signals from the Fed, and the recent conclusion of the retail Treasury bond offering that siphoned off excess liquidity from the market.

Mr. Ricafort expects T-bill yields to go up by less than 10 bps and T-bond rates to rise by as much as 20-30 bps.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the market may remain cautious as it awaits the Fed and the Bangko Sentral ng Pilipinas’ (BSP) policy decisions next week, citing the upcoming US consumer inflation data and the depreciation of the peso.

August US consumer price index data will be released on Tuesday. Consumer inflation in the US slowed to 8.5% in July from an over 40-year high of 9.1% hit in June.

Fed Chair Jerome H. Powell on Thursday said the central bank is “strongly committed” to fighting inflation and needs to continue acting strongly to bring prices down.

The Fed is scheduled to review policy on Sept. 20-21, where markets expect another aggressive hike. It has raised rates by 225 bps so far since March.

Meanwhile, the ECB last week raised benchmark interest rates by 75 bps, signaling more hikes amid expectations of rising prices.

At home, BSP Governor Felipe M. Medalla earlier said the central bank may need to respond if the Fed remains hawkish, as its spillover effects on the market, especially the peso, could affect inflation.

The BSP has hiked benchmark rates by 175 bps since May in a bid to keep rising prices in check.

The peso closed at P56.82 per dollar on Friday, gaining 36 centavos from its all-time low P57.18 finish on Thursday, Bankers Association of the Philippines data showed.

The local unit’s rebound against the greenback followed a six-day decline that saw it post new record lows for five straight sessions.

Headline inflation eased to 6.3% in August from 6.4% in July. This brought the eight-month average to 4.9%, higher than the central bank’s 2-4% target but still below its 5.4% forecast for the year. 

At the secondary market on Friday, the 91-, 182-, and 364-day T-bills were quoted at 2.461%, 3.2996%, and 3.9767%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

Meanwhile, the 10-year bond was quoted at 6.6309%.

Last week, the Treasury partially awarded the T-bills it auctioned off even as bids reached P26.653 billion, above its P15-billion offer.

Broken down, the Treasury borrowed just P4.543 billion from the 91-day securities on Monday versus the P5-billion plan, even as the tenor attracted P10.923 billion in bids. The average yield on the tenor went up by 24.8 bps to 2.318% as accepted rates ranged from 1.975% to 2.4%.

The BTr likewise raised only P2.525 billion from the 182-day debt papers out of the P5-billion program, even with demand for reaching P10.629 billion. The debt paper’s average rate rose by 14.9 bps to 3.485% as the government accepted offers ranging from 3.435% to 3.5%.

Meanwhile, the government rejected all bids for 364-day securities on offer on Monday, even as tenders reached P5.101 billion. Had the BTr accepted all offers, the average rate of the tenor would have gone up by 57.4 bps to 4.356% from the 3.782% fetched for the last award.

The BTr wants to raise P200 billion from the domestic market this month, or P60 billion through T-bills and P140 billion via T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of gross domestic product this year. — Diego Gabriel C. Robles

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

PHILIPPINE STAR/ MICHAEL VARCAS WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global...

News

Buildings are seen along EDSA in Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN By Diego Gabriel C. Robles  THE WORLD BANK (WB) upgraded...

News

Heavy traffic is seen on the southbound lane of EDSA in Cubao, Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN THE PHILIPPINE auto industry’s...

News

REUTERS THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a second off-cycle rate hike in early November when the US Federal Reserve is expected...

News

Vendors arrange their goods at a public market in Manila. — PHILIPPINE STAR/ RUSSEL A. PALMA THE ASIAN Development Bank (ADB) is planning to...

Editor’s Pick

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity...

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

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

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

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.