Treasury and bond rates could rise as oil prices rise due to crisis

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RATES OF PUBLIC SECURITIES may increase this week on risoil prices amid concerns global supply disruptions after Russia attacked Ukraine.

The Bureau of the Treasury (BTr) will on Monday offer 15 billion pesos in treasury bills (treasury bills), or 5 billion pesos each in 91-, 182- and 364-day securities.

On Tuesday it will be auctioned off 35 billion pesos in new three-year Treasury bonds (T-bonds).

Rates set to rise this week on rising oil pricesffect inflation expectations, said a trader 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 Treasury bill and Treasury bond yields may continue to rise after the latest Treasury bond offering ( retail RTB) has mopped up the excess liquidity in the market.

“Ongoing tensions between Russia and Ukraine that have recently driven world oil prices to new seven-year highs could lead to an uptick inflation,” Mr. Ricafort added.

Brent crude surged above $100 a barrel on Thursday for the Iffirst time since 2014 after Russia invaded Ukraine, Reuters reported.

On Friday, Brent crude futures fell 1.2% to $97.93 a barrel, while U.S. West Texas Intermediate crude fell 1.3% to $91.59 a barrel.

The Bangko Sentral ng Pilipinas (BSP) said last week that it stands by its oil price forecast for the time being.

Earlier this month, the BSP raised its inflation forecast for 2022 to 3.7% from 3.4% previously, and raised its estimate for 2023 to 3.3% from 3.2%.

Meanwhile, the government raised an initial P120.764 billion at its rate auction on February 15 for its offuh from Ifthe five-year RTBs as tenders reached 183.44 billion pesos, more than six times the 30 billion peso plan. Retail bonds reached a coupon rate of 4.875%.

The offThe period of the debt denominated in peso is fixed from February 15 to 28. There will also be a swap offer for bonds maturing on March 14 and July 4.

The BTr had canceled the other two bond auctions for February to make way for the RTB offuh.

In the secondary market on Friday, 91-day, 182-day and 364-day Treasury bills were quoted at 0.9723%, 1.1639% and 1.5453%, respectively, based on PHP Bloomberg valuation benchmark rates. published on the Philippine Dealing System website.

Meanwhile, three-year bonds reached a yield of 3.7535%.

The government released the full 15 billion pesos in treasury bonds as planned last week. Total tenders reached 41.23 billion pesos, nearly three times the initial offuh.

Stalled, the Treasury office raised 5 billion pesos as expected via 91-day securities from 13.57 billion pesos in bids. Three-month debt securities averaged 0.81%, up 10 basis points (bps) from the 0.71% seen the previous week.

The BTr also borrowed the 5 billion pesos programmed on the 182-day securities that it offered on Monday from 14.79 billion pesos during calls for tenders. The average six-month Treasury bill rate rose 4.4 basis points to 1.066% from 1.022% previously.

Finally, the government made a full price of 5 billion pesos of the 364-day debt that it offered on Monday as bids reached 12.874 billion pesos. The instrument’s average one-year yield stood at 1.475%, up 6.7 basis points from 1.408% a week earlier.

BTr plans to raise 250 billion pesos domestically this month, or 75 billion pesos through treasury bills and 175 billion pesos from treasury bonds.

The government is borrowing from local and external sources to help finance a budget deficit capped at 7.7% of gross domestic product this year. — Jenina P. Ibanez

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