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Treasury bill rates likely to go up

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Bureau of Treasury
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RATES of the Treasury bills (T-bill) on offer today will likely climb, with oversubscription in tenders expected, as investors await the local inflation print for September.

The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills on Monday. Broken down, the government plans to raise P4 billion through the three-month papers, P5 billion via the six-month T-bills, and another P6 billion in one-year debt.

Traders interviewed before the weekend said yields on the T-bills on offer today could pick up from last week’s offer, with one saying it will climb by five to 10 basis points (bp).

The Treasury opted to reject all bids for the P15-billion T-bills auction last week.

Had the BTr made a full award, the rates of the three- and six-month papers would have fetched rates of 4.381% and 5.142%, respectively, while the rate of the one-year bills would have climbed to 5.643%.

At the secondary market on Friday, yields on the 91- and 182-day papers were quoted at 4.3094% and 4.6491%, respectively, while the 364-day T-bills fetched a 5.276% yield.

The trader said that the offer volume will be 1.5 times oversubscribed, although the Treasury could reject offers at the longer tenors.

“The BTr could reject bids again probably on longer tenors this time because they have been rejecting the 91-day [papers] for two consecutive weeks,” the trader said.

“That’s the usual demand for the T-bills. Usually, tendered volume is 1.5-2 times oversubscribed.”

Another trader added that market players will await the September inflation print due to be released on Friday.

The Bangko Sentral ng Pilipinas (BSP) said last week it is expecting inflation to have further accelerated to 6.8% in September or a range of 6.3-7.1%.

If realized, it would be faster than the 6.4% print in August and would be the highest since the 7.2% tallied in February 2009.

“[This is due to] higher domestic petroleum prices, higher prices of rice and other agricultural commodities due to typhoon Ompong, and the peso depreciation contributed to the upside pressures for the month,” the central bank’s Department of Economic Research said in a statement.

“For [this] week, we are looking at the inflation data and the auction last week,” the trader said.

The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds.

The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product. — Karl Angelo N. Vidal