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T-bill rates may move sideways due to new variant, RTB offering

BW FILE PHOTO

RATES of Treasury bills (T-bills) could move sideways this week on concerns over the new coronavirus variant.

The Bureau of the Treasury (BTr) will offer P10 billion in T-bills this week, broken down into P2 billion in 91-day papers, P3 billion in 182-day instruments, and P5 billion in 364-day securities.

A bond trader in a Viber message said rates of T-bills will likely move sideways or downwards by around 5 basis points (bps).

“Despite decisions abroad seemingly headed towards increasing rates and tapering asset purchases, the new COVID variant has given cause for concern,” the bond trader said.

South Africa’s health minister had announced the detection of a new coronavirus disease 2019 (COVID-19) variant, which scientists said had a high number of mutations.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said yields could increase slightly in line with a pickup in secondary market rates.

“The recent RTB (retail Treasury bond) offering could have siphoned off some of the excess liquidity in the financial markets,” Mr. Ricafort said.

The Treasury raised an initial P113.545 billion from its offer of 5.5-year RTBs at the price-setting auction on Nov. 16.

This was oversubscribed by more than five times versus the initial P30-billion offer. The RTBs had fetched a coupon rate of 4.625%.

At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 1.2378%, 1.4571% and 1.6963%, respectively, based on the PHL Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.

The BTr raised P15 billion as planned via the T-bills it auctioned off last week as total bids reached P33.76 billion, more than double the initial offer but slightly lower than the P37.99 billion in tenders seen a week earlier.

Broken down, the BTr raised the programmed P5 billion via the 91-day debt papers from P8.78 billion in bids. The three-month T-bills fetched an average rate of 1.178%, up by 2.8 bps from the 1.15% seen at the previous offering.

The BTr also borrowed P5 billion as planned from the 182-day securities it offered last week as bids reached P10.86 billion. The average rate of the six-month T-bills went up by 3 bps to 1.443% from 1.413% a week earlier.

Lastly, the government made a full P5-billion award of the 364-day T-bills as the tenor attracted tenders worth P14.12 billion. The average yield on the one-year instruments stood at 1.628%, inching up by 0.7 bp from the 1.621% fetched during the previous auction.

The BTr plans to borrow P70 billion from the domestic market in December, or P30 billion via T-bills and P40 billion from Treasury bonds.

The government wants to raise P3 trillion from local and external sources this year to help fund a budget deficit seen to hit 9.3% of the country’s gross domestic product. — Jenina P. Ibanez

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