Low demand to raise rates on treasury bills, bonds

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GOVERNMENT SECURITY RATEtie on offUm this week, that could increase slightly after the peso hits the 50p per dollar level and demand for safe-haven assets declines as the economic recovery gathers pace.

The Treasury Office (BTr) will auction on Monday 15 billion pesos of treasury bills (treasury bills), divided into 5 billion pesos each in debt securities at 91, 182 and 364 days.

Tuesday the BTr will be offer 35 billion pesos in new 20-year Treasury bonds (T-bonds).

Two bond traders polled on Friday said they expected Treasury bill rates to move sideways with a slight upward bias compared to yields at last week’s auction.

For 20-year bonds, the FiThe first trader saw his coupon rate going from 4.875% to 5.125%, while the second trader gave a higher forecast range of 5% to 5.25%.

“The market took a defensive stance last week due to the relatively high USD / PHP levels and the breaking of the psychological handle P50,” the lead trader said.

The peso depreciated to P50.08 against the greenback on Friday after closing at P49.875 on Thursday. It was his weakest Fiin more than a year or since its closing of P50.19 per dollar on June 23, 2020.

Meanwhile, the second trader said the demand for government securities has declined off recently, as investors start to look to other high yielding assets due to signs of economic recovery at home and abroad.

The Philippines’ merchandise exports and imports continued to grow in May, although at a slower pace than in April, according to the latest data from the Statistics Authority of the Philippines.

Exports rose 29.8% yoy to $ 5.89 billion in May to rebound from the contraction of 27% a year ago, while imports rose 47.7% to 8.65 billion dollars compared to the 41% drop in the same month last year. However, analysts noted that the rebound was less than expected and the increase may have been largely due to the base thffect.

Local manufacturers also reported improving conditions in June after IHS Markit’s Philippine Manufacturing Purchasing Managers’ Index (PMI) rose to 50.8 last month from 49.9 in May, the first time since. March that the index broke the 50 neutral mark that separates contraction from expansion.

The BTr last week made a full price of its offst of P15 billion treasury bills, with total offers reaching P49.323 billion.

Broken down, the Treasury raised 5 billion pesos as programmed via the 91-day debt securities. Three-month bonds reached an average rate of 1.044%, up from the 1.031% quoted at the June 28 auction.

He also borrowed the expected 5 billion pesos on 182-day treasury bills at an average rate of 1.351%, up from 1.332% previously.

Finally, the BTr allotted 5 billion pesos of the 364-day securities that it offered, while the average yield edged up to 1.568% from 1.562% the week before.

Meanwhile, the last time the Treasury offered the 20-year term was on June 29, when it raised 35 billion pesos as planned through reissued papers that have an 11-year remaining term. and eight months. The offuh attracted P65.265 billion offers.

The reissued bonds reached an average rate of 4.187%, above the coupon of 3.635% quoted for the series.

On the secondary market on Friday, the 91, 182 and 364 day T-bills were listed at 1.178%, 1.412% and 1.602%, respectively, based on the PHL Bloomberg valuation benchmark rates published on the website of the Philippine Dealing System. Meanwhile, the 20-year note reached a rate of 4.967%.

The Treasury is looking to raise 235 billion pesos from the local market this month: 60 billion pesos through weekly Treasury bill offers and 175 billion pesos from weekly Treasury bond auctions.

The government wants to borrow P3 trillion from domestic and external sources this year to help finance a budget ofFicit reached 9.3% of gross domestic product. – Beatrice M. Laforga



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