By Aaron Michael C. Sy, Reporter
PHILIPPINE Treasury bill and bond rates may extend their recent decline this week as traders position for another Bangko Sentral ng Pilipinas (BSP) rate cut in December.
The Bureau of the Treasury will offer P22 billion in T-bills on Monday, split into P7 billion in 91-day notes and P7.5 billion each in 182- and 364-day securities. A day later, the government will auction P35 billion across two tenors: P20 billion in 10-year bonds with a remaining life of six years and 10 months, and P15 billion in 20-year notes with 18 years and six months left.
T-bill and T-bond yields may follow the drop seen in the secondary market last week amid rising expectations of easier monetary policy, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.
The central bank cut its benchmark rate by 25 basis points last month, the fourth straight reduction, bringing the policy rate to 4.75%. The Monetary Board has lowered rates by 175 bps since August last year.
BSP Governor Eli M. Remolona, Jr. said a further cut at the Dec. 11 meeting is possible as growth risks mount, including a fallout from a widening corruption scandal tied to public infrastructure spending.
Secondary-market yields extended their slide on Friday. The 91-, 182- and 364-day T-bills fell 4.89 bps, 3.35 bps, and 7.18 bps, respectively, to 4.8914%, 5.0425%, and 5.1082%, PHP Bloomberg Valuation Service data showed.
The 10-year yield dropped 9.48 bps to 5.883%, while the seven-year — the closest benchmark for the reissued 10-year bonds — slipped 9.77 bps to 5.6584%. The 20-year eased 0.97 bp to 6.3701%.
A trader said the market saw profit-taking on Friday as political tensions escalated. Former House Committee on Appropriations Chairman Zaldy S. Co accused President Ferdinand R. Marcos, Jr. of ordering P100 billion in project insertions in the 2025 budget, a claim rejected by the Presidential Communications Office and Budget Secretary Amenah F. Pangandaman.
The trader expects solid demand at this week’s T-bond sale, forecasting yields of 5.625% to 5.675% for the seven-year bucket and 6.3% to 6.35% for the 20-year notes.
Last week, the Treasury raised P22 billion as planned from its T-bill auction, with total bids reaching P98.311 billion. The 91-day average rate slipped to 4.821%, the 182-day to 4.981%, and the 364-day to 5.054%, each down by about 4-5 bps from the prior auction.
The reissued 10-year bond was last sold on Sept. 2 at an average 5.939%, while the 20-year was last offered on Sept. 23 at 6.421%, when the sale fell short of target.
The Treasury seeks to raise P158 billion from the domestic market this month, including P88 billion in T-bills and P70 billion in T-bonds. The government relies on local and external borrowing to fund a budget deficit capped at P1.56 trillion, or 5.5% of economic output.
