Analysts: T-bills, bonds may end mixed, track secondary markets

THE RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) at separate auctions this week could track mixed movements in secondary markets amid lower global crude prices, analysts said last week.

“Yields mostly eased in the secondary market on Friday due to improving market sentiment as global crude prices continued to lower amid easing tensions between Israel and Iran,” Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.

He said most yields have started to “correct lower” after rising for most weeks last month, when geopolitical tensions between Israel and Iran started.

With tensions having subsided with no new retaliation from both sides since April 20, global crude prices have posted new 1.5-month lows, “erasing all the gains and now even lower since the Israel-Iran tensions started on Apr. 1,” he added.

“This is a good signal for the markets, inflation and on the overall economy,” Mr. Ricafort said.

The Bureau of the Treasury (BTr) will sell P15 billion in T-bills — P5 billion each in 91-, 182- and 364-day debt — on Monday. On Tuesday, it will sell P30 billion in reissued 10-year T-bonds with a remaining life of nine years and eight months.

At the secondary market on Friday, the 91- and 182-day T-bills fell by 4.41 basis points (bps) and 8.92 bps week on week to end at 5.8577% and 5.9309%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data posted on the Philippine Dealing System website.

On the other hand, the 364-day T-bill went up by 1.34 bps to 6.0642%., while the 10-year bond rose by 4.21 bps to 6.9887%.

Oil prices fell on Friday and posted their steepest weekly loss in three months as investors weighed weak US job data and the timing of a US Federal Reserve interest rate cut, Reuters reported.

Brent crude futures for July settled 0.85% or 71 cents lower at $82.96 a barrel. US West Texas Intermediate crude for June fell by 1.06% or 84 cents to $78.11 a barrel.

Last week, the Treasury bureau raised P15 billion from T-bills as planned as bids reached P51.204 billion, or nearly thrice the amount on the auction block.

The BTr borrowed P5 billion as programmed from the 91-day T-bills as tenders for the tenor reached P16.16 billion. The average yield for the three-month paper went down by 1.9 bps to 5.869%. Accepted rates ranged from 5.835% to 5.889%.

The government likewise fully awarded P5 billion of the 182-day debt, with bids reaching P18.59 billion. The average rate for the six-month T-bill fell by 1.4 basis points to 5.988%. Accepted rates were from 5.97% to 6.013%.

The Treasury also raised P5 billion as planned from the 364-day debt as demand for the tenor hit P16.454 billion. The average rate of the one-year debt inched up by 0.1 bp to 6.081%. Accepted yields were from 6.065% to 6.10%.

The reissued 10-year bonds to be auctioned off on Tuesday were last offered on April 8, when the government raised P20.625 billion out of the planned P30 billion for an average rate of 6.439%, 18.9 bps above the 6.25% coupon for the series.

A trader said in an e-mail the T-bond rate could range from 6.9% to 7%.

The BTr seeks to raise P210 billion from the domestic market this month — P60 billion from Treasury bills and P150 billion via T-bonds. — AMCS