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YIELDS OF Public Securities in orffer this week will probably continue to rise after February inFloridaation peaked at 26 months.
The Treasury Office (BTr) wants to borrow P20 billion through Treasury bills (Treasury bills) on Monday: P5 billion each of the 91 and 182-day debt securities and P10 billion through instruments 364 days.
On Tuesday, the BTr will auction off P30 billion in reissued 10-year Treasury bonds (T bonds) with a remaining life of six years and one month.
Treasury bill rates are likely to rise as much as five basis points (bps) in this week’s auction, said Noel S. Reyes, chief investment officer for the Trust and Asset Management Group at Security Bank Corp., while a bond trader expects short-term yields to rise by as much as 10 bps.
“The market is still obsessed withFloridagiven the rising prices of oil and raw materials, ”Reyes said via Viber on Saturday.
Consumer prices rose the fastest for the fifth consecutive month to a 26-month high in February as food prices continued to rise, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary PSA data showed headline inflation at 4.7% last month, rebounding from 4.2% in January 2021 and 2.6% in February 2020. The February inflation result marked the fastest pace since 5.1% in December 2018.
The last headline to beThe figure was slightly lower than the median of 4.8% in a Business world survey, but fell within the estimate of 4.3% -5.1% given by the Bangko Sentral ng Pilipinas (BSP) for February.
So far this year, February inflation stood at 4.5%, beyond the 2-4% target of the BSP for the year.
Meanwhile, Reyes said that the reissued 10-year Treasury bonds could reach an average rate close to 4%, while the trader gave a forecast range of 3.65-3.75%.
The trader said there remains ample demand for government securities despite the expected pickup in yields, but that the volume of offers could be less than the high offers seen in early 2021.
Last week, the Treasury raised P20 billion as planned through Treasury bills of P41.052 billion in offers, even as rates rose across the board.
Broken down, it borrowed the P5 billion scheduled through the 91-day debt securities, as the tenders reached P7.595 billion. Three-month papers obtained an average rate of 1.04%, compared to the 0.875% observed in the auction on February 22.
It also raised P5 billion as planned from 182-day treasury bills of P8.462 billion in deals. The average rate on six-month debt rose to 1,226% from 1,067% previously.
Finally, the government awarded a total of P10 billion of debt documents to 364 days of bidding for a value of P24.995 billion. One-year stocks saw yields rise to 1.68% from the previous rate of 1.527%.
Meanwhile, the last time the BTr orffered the series of bonds reissued at 10 years I like thisffThe Tuesday was January 19, when it raised P30 billion as planned after attracting P82.5 billion in demand.
The bonds obtained an average rate of 2.719%, below the 2.791% seen in the previous offering in December.
On the secondary market on Friday, yields on three-month, six-month, and one-year T-bills were 1,082%, 1,195% and 1,683%, based on the PHL Bloomberg valuation benchmark rates published on the trading system of Philippines website.
Meanwhile, the seven-year term: the closest benchmark remaining useful life of the 10-year bonds at orffer Tuesday – it traded at 3,479%.
The bond trader added that continued rise in US Treasury yields could also boost local government bond rates.
The benchmark 10-year US Treasury yield reached 1.56% on Friday, an 11bp increase from 1.45% on Monday, according to the US Treasury website. .
The BTr wants to raise P160 billion from the local bond market this month, broken down into P100 billion of Treasury bills to be offered weekly and P60 billion through Treasury bond auctions every two weeks.
The government is looking to borrow P3 trillion this year from local and foreign lenders to help finance its budget ofto becit is forecast to reach 8.9% of gross domestic product. – Beatrice M. Laforga
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