RATES on government bonds offered this week could decline following rejection of T-bond auctions last month and amid inflation concerns.
The Treasury Office (BTr) will auction 15 billion pesos in treasury bills (treasury bills) on Monday, split into 5 billion pesos each in 91, 182 and 364 day debt securities.
On Tuesday, it will offer 35 billion pesos of reissued seven-year Treasury bonds with a remaining term of six years and seven months.
One trader said Treasury bill yields could move sideways or drop as much as 5 basis points (bps), while the seven-year bond could reach an average rate of 4.5% to 4.7% .
“Investors will take note of the recent auctions of seven- and ten-year notes and local securities inflwill also be a concern, ”the merchant said in a Viber message.
“While inflAtion for December could remain above the Bangko Sentral ng Pilipinas (BSP) target band, inflation in 2022 is expected to be lower.
The Treasury rejected all offers of P20 billion each in seven- and ten-year T bonds it offered in December. National Treasurer Rosalia V. de Leon had said the government rejected all offers for bonds because there was room for lower rates, with lower inflation and with the central bank committing to keep borrowing costs stable to support economic recovery.
The BSP said last week that December inflation was probably in the 3.5% to 4.3% range.
To compare, title inflation stood at 4.2% in November and 3.5% in December 2020.
Headline monthly inflation exceeded the BSP target in 2021, except in July when it stood at 4%. This was mainly attributed to food supply problems. Year-to-date inflation is 4.5%, which is still above the central bank’s forecast of 4.4% for the year.
The central bank has raised its inflation forecast for 2022 to 3.4% from 3.3% due to food supply constraints, petitions for transport tariff increases and global supply chain issues.
The chief economist of Rizal Commercial Banking Corp. Michael L. Ricafort said Treasury bill yields may decline slightly due to excess liquidity in the financial system and the improvement in the government’s cash position after the offRetail Treasury Bills (RTBs) issued at retail.
“Short-term interest rates tend to ease at the end of the new year, after some front activity towards the end of the accounting year,” he said.
The government has raised P360 billion from its offuh from FiRTB at five and a half offuh which ended in November amid strong investor demand.
Meanwhile, Ricafort said Treasury bond rates could keep pace with returns seen in the secondary market, which he says has seen mixed week-to-week changes amid aversion. increased market risk caused by a recent spike in cases of Omicron variants.
On Friday, in the secondary market, 91-182 and 364-day T-bills were listed at 1.0945%, 1.2693% and 1.6597%, respectively, based on PHL’s valuation benchmark rates. Bloomberg published on the Philippine Dealing System website.
Meanwhile, the seven-year bonds returned 4.6311%.
The BTr raised P10 billion as planned via the treasury bills it auctioned off December 13.
Broken down, the government auctioned P2 billion of 91-day securities as expected from P16.757 billion of bids. The grade reached an average rate of 1.125%, down 3 basis points from the 1.155% seen in the previous auction.
BTr also awarded 3 billion pesos of its 182-day instrument offering, which attracted 19.36 billion pesos in tenders. The six-month paper hit an average rate of 1.385%, down 5.8 basis points from the 1.443% cited a week earlier.
Finally, the government raised 5 billion pesos as planned through its 364-day debt offering, which attracted 16.641 billion pesos in offers. The average rate fell 1.8bp to 1.625% from 1.643% previously.
Meanwhile, the last time the BTr auctioned off the proposed seven-year reissued Treasury bonds on Tuesday was December 14, when it rejected all bids even as bids hit 52.267 billion pesos. , more than double the 20 billion pesos offered.
The government plans to borrow 200 billion pesos from the domestic market this month, or 60 billion pesos through treasury bills and 140 billion pesos from treasury bonds. – Jenina P. Ibañez