Domestic Bonds

Treasuries and bond rates could move sideways this week

RATE of public securities on offer this week are expected to move sideways following lower secondary market yields due to lower oil prices.

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

On Tuesday it will be auctioned off 35 billion pesos in reissue IfFive-year Treasury Notes (T-bonds) with a remaining life of four years.

A bond trader in a Viber message said Treasury yields are expected to move sideways from the previous auction, while the five-year bond could average yield between 4.875% and 5%.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that rates could be flat or slightly lower week-over-week after yields fell on the secondary market.

PHP Bloomberg Valuation (BVAL) returns over two to six years are also slightly lower by 0.01 to 0.03 [basis point (bp)] week-over-week, while eight- to 30-year maturities were mostly slightly higher week-over-week. he added.

Secondary market yields fell amid falling global oil prices due to a spike in coronavirus cases in China that prompted a lockdown, as well as the release of oil reserves by the United States and other countries, he said.

Mr Ricafort said it had also raised hopes of a reductionflshareholder pressures.

“The tax-paying season, typically for the month of April, could also increase national government cash flow and revenue, reducing the need for additional borrowing and helping somewhat to ease the pressure on auction returns. “, he added. The deadline for the IfTax filing is April 18 this year, as the usual April 15 deadline falls on Good Friday.

Oil prices rose 2% on Friday but posted their second consecutive weekly decline after countries announced plans to release crude oil from their strategic stockpiles, Reuters reported.

Brent crude stabilized $2.20 or 2.19% at $102.78 a barrel. US Crude rose $2.23 to $98.26.

Central banks around the world have tightened monetary policies to moderate inflation despite lingering risks to growth.

Headline inflation in March was 4%, which is the upper limit of the central bank’s 2-4% target. It was faster than February’s 3%, showing the impact of soaring oil prices caused by the Russian-Ukrainian war.

BSP Governor Benjamin E. Diokno said on Tuesday that he was ready to take preventive measures ifflthe expectations of the population become threatened or unanchored. He said March consumer price index data suggests inflation will likely be high in the coming months.

The central bank kept its key rates unchanged for the 11and direct meeting last month. Diokno said earlier that the policy rate could reach as high as 2.75% by next year, up from 2% currently, which is an all-time high.

In the secondary market on Friday, 91-day, 182-day and 364-day Treasury bills were quoted at 1.3352%, 1.5165 and 1.7904%, respectively, based on the PHP BVAL benchmark rates published on the site. Philippine Dealing System website.

The government has fully granted the Treasury bonds it offered last week after several weeks of rejections amid strong demand. Total tenders reached 54.59 billion pesos, almost three times more than the initial bid.

The government borrowed 5 billion pesos as planned through 91-day treasury bills at its auction last week, with the total tenders reaching 29.35 billion pesos. The average three-month debt rate fell 20.7 basis points to 1.38% from 1.587% last week.

The Treasury also raised 5 billion pesos as expected from 182-day securities, with bids reaching 14.17 billion pesos. The tenor’s average yield rose 17.4 basis points to 1.781% from 1.607% previously.

Finally, the BTr allocated all of the 364-day Treasury bills up to 5 billion pesos while the tenders reached 11.072 billion pesos. The average one-year paper rate rose 9.1 basis points to 1.883% from 1.792% at the previous auction.

Meanwhile, the last time the reissued five-year bonds on Tuesday were offered on March 15, when auction volume was partially allotted as investors demanded higher yields in anticipation of the Reserve rate hike. US Federal.

The Treasury only raised 13.035 billion pesos in this auction, less than the scheduled 35 billion pesos, even as the bid attracted 35.305 billion pesos in bids.

Debt has been allotted at an average rate of 4.669%, up 58 basis points from the 4.089% quoted when the series was last offered on Feb. 3.

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 is borrowing from local and external sources to help finance a budget deficit capped at 7.7% of gross domestic product this year. — T. J. Tomas with Reuters