RATES of government securities may increase this week on rising oil prices amid concerns over global supply disruptions after Russia attacked Ukraine.
The Bureau of the Treasury (BTr) will offer P15 billion in Treasury bills (T-bills) on Monday, or P5 billion each in 91-, 182- and 364-day securities.
On Tuesday, it will auction off P35 billion in fresh three-year Treasury bonds (T-bonds).
Rates are expected to go up this week as rising oil prices affect inflation expectations, a trader said in a Viber message.
“We are reacting more to the effect of war on oil prices,” the trader said.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that T-bill and T-bond yields could continue to increase after the latest retail Treasury bond (RTB) offering mopped up excess liquidity from the market.
“Lingering tensions on Russia-Ukraine that led global oil prices to new seven-year highs recently could lead to some uptick in inflation,” Mr. Ricafort added.
Brent crude on Thursday exceeded $100 a barrel for the first time since 2014 after Russia invaded Ukraine, Reuters reported.
On Friday, Brent crude futures slipped by 1.2% to $97.93 a barrel, while US West Texas Intermediate crude fell by 1.3% to $91.59 a barrel.
The Bangko Sentral ng Pilipinas (BSP) last week said it is keeping its oil price projections for now.
Earlier this month, the BSP raised its inflation forecast for 2022 to 3.7% from 3.4% previously, and hiked its 2023 estimate to 3.3% from 3.2%.
Meanwhile, the government raised an initial P120.764 billion at its rate-setting auction on Feb. 15 for its offer of five-year RTBs as tenders reached P183.44 billion, or more than six times the P30-billion plan. The retail bonds fetched a coupon rate of 4.875%.
The offer period for the peso-denominated debt is set to run from Feb. 15 to 28. There will also be a swap offer for bonds falling due on March 14 and July 4.
The BTr had canceled the remaining two bond auctions for February to make way for the RTB offer.
At the secondary market on Friday, the 91- 182- and 364-day T-bills were quoted at 0.9723%, 1.1639%, and 1.5453%, respectively, based on the PHP Bloomberg Valuation Reference Rates published on the Philippine Dealing System’s website.
Meanwhile, the three-year bonds fetched a yield of 3.7535%.
The government made a full award of P15 billion in T-bills as planned last week. Total tenders reached P41.23 billion, almost three times the initial offer.
Broken down, the Treasury bureau raised P5 billion as planned via the 91-day securities from P13.57 billion in bids. The three-month debt papers fetched an average rate of 0.81%, rising by 10 basis points (bps) from the 0.71% seen the previous week.
The BTr also borrowed the programmed P5 billion from the 182-day securities it offered on Monday from P14.79 billion in tenders. The average rate of the six-month T-bills rose by 4.4 bps to 1.066% from 1.022% previously.
Lastly, the government made a full P5-billion award of the 364-day debt papers it offered on Monday as bids reached P12.874 billion. The average yield on the one-year instrument stood at 1.475%, up by 6.7 bps from 1.408% a week earlier.
The BTr plans to raise P250 billion from the domestic market this month, or P75 billion via T-bills and P175 billion from T-bonds.
The government borrows from local and external sources to help fund a budget deficit capped at 7.7% of gross domestic product this year. — Jenina P. Ibañez