T-bill, bond yields may decline with BSP expected to cut rates

YIELDS on the Treasury bills (T-bills) and Treasury bonds (T-bonds) to be offered this week could mostly go down ahead of an expected rate cut by the Bangko Sentral ng Pilipinas (BSP) on Thursday.

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The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Tuesday, or P8 billion in 91-day and 182-day securities and P9 billion in 364-day papers.

On Wednesday, the government is looking to borrow a combined P35 billion via a dual-tranche offering of reissued T-bonds — P10 billion from seven-year papers with a remaining life of two years and seven months, and P25 billion through 25-year notes with a remaining life of 24 years and five months.

This week’s auctions were moved from the usual Monday and Tuesday schedules due to aholiday.

The T-bills and T-bonds on offer could fetch rates in line with comparable secondary market levels, which mostly declined week on week on expectations that the Monetary Board will cut benchmark borrowing costs at its Aug. 28 review, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said ina Viber message.

A trader said in an email that the reissued seven-year bonds could fetch rates ranging from 5.75% to 5.8%, while the 25-year bonds could be quoted between 6.45% and 6.55%, with the auction expected to attract “decent demand”

“We expect two-way interest in the next few days heading to the Monetary Board meeting, where a cut is already priced in,” the trader said.