Treasury bill and bond rates will drop

PRICES for government guaranteeslinks on offer could relax this week amid excess liquidity in the Iffinancial system.

The Bureau of the Treasury (BTr) will on Monday offer 15 billion pesos in treasury bills (treasury bills), or 5 billion pesos each in 91-, 182- and 364-day securities.

On Tuesday it will be auctioned off 35 billion pesos in new 10-year Treasury bonds (T-bonds).

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber message said Treasury yields could ease in response to excess liquidity and effects of slowing inflation.

“The national government’s cash position increased after borrowing 300 billion pesos from Bangko Sentral ng Pilipinas (BSP) as well as the issuance of retail Treasury bonds which could reduce the need for the government to borrow /to crowd out the local market,” he said. .

Meanwhile, a bond trader said Treasury yields could fall 5-10 basis points (bps), while bids for new 10-year notes could range between 4.7% and 5 .1%.

“It looks like demand for government debt will remain in the near term, with end users still buying Treasuries. However, demand for notes, especially those at the long end of the curve, may not be as robust despite lower than expected inflation and the BSP governor saying a rate hike is unlikely in the first half of 2022,” the trader said in a Viber message.

“That may be because investors are focused on overseas developments, such as the Fed looking to raise rates three to four times this year.”

Title inflation in December fell to 3.6%, its lowest level in a year, from 4.2% recorded in November due to slowing food and transport costs.

The December print lifted the 2021 average to a three-year high of 4.5%, beating the central bank’s 2-4% target as well as its revised forecast of 4.4%.

Last week, US Federal Reserve Governor Lael Brainard said interest rate hikes could begin as soon as the US central bank ends its bond purchases, scheduled for March.

The International Monetary Fund said emerging economies should brace for US Fed policy tightening that could shake Financial markets.

In the secondary market on Friday, 91-day, 182-day and 364-day Treasury bills were quoted at 0.9438%, 1.1246% and 1.4809%, respectively, based on PHL Bloomberg valuation benchmark rates. published on the Philippine Dealing System website.

Meanwhile, 10-year bonds reached a yield of 4.8243%.

Last week, the Treasury raised 15 billion pesos as planned via Treasury bonds it offwhile total tenders reached 73.58 billion pesos, nearly five times the initial bid and more than the 71.05 billion pesos registered a week earlier.

Stalled, the Treasury office raised 5 billion pesos as expected via 91-day securities from 23.7 billion pesos in bids. The three-month debt security averaged 0.969%, down 10.6 basis points from the 1.075% previously seen.

The BTr also borrowed 5 billion pesos as planned on the 182-day securities it offered on Monday from 24.98 billion pesos in tenders. The average six-month Treasury bill rate fell 14.8 basis points to 1.121% from 1.269% previously.

Finally, the government allocated all of the 364-day debt securities up to 5 billion pesos while offers reached 24.9 billion pesos. The instrument’s average one-year yield stood at 1.468%, down 13.2 basis points from the 1.6% achieved a week earlier.

BTr plans to raise 200 billion pesos domestically this month, or 60 billion pesos through treasury bills and 140 billion pesos from treasury bonds.

The government borrows from local and external sources to help finance a budget ofIfcit is expected to reach 7.7% of gross domestic product this year. — Jenina P. Ibanez

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