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Peso GS Weekly: De-risk ahead of more supply
Players are better sellers in the belly of the curve due to risk-off sentiment.
By Metrobank Local Currency Trading Department and Maria Christina Virtudazo
What happened last week
The local government securities (GS) market saw mixed activity throughout last week, with global yield movements influencing local trends. A decline in global yields led to initial buying interest, but the momentum faded as selling pressure emerged.
Elsewhere, the Bureau of the Treasury (BTr) fully awarded Treasury bills last Monday anywhere between 1 to 3 basis points (bps) higher week-on-week. Meanwhile, the reissuance of the 20-Year Fixed Rate Treasury Note (FXTN) 20-27 last Tuesday saw moderate demand, awarded at an average rate of 6.376%. Following the auction, medium-term bonds saw some buying interest.
Midweek, the local GS market tracked the overnight decline in global yields, with 4- to 7-Year bonds initially opening lower. However, profit-taking quickly erased gains. The 4-year Retail Treasury Bond (RTB) 5-18 remained active. Meanwhile, demand for shorter-term bonds increased as risk sentiment weakened, with 2- to 5-Year bonds seeing significant activity.
By Friday, selling pressure intensified due to broad risk-off sentiment in global markets. Benchmark bonds in the 4- to 10-Year space saw de-risking activity. Despite the market’s cautious stance, some investors remained on the sidelines, awaiting new catalysts before making significant moves. On a week-on-week basis, most yields ended anywhere between 1 bp lower to 6 bps higher.
BVAL Rates
| Tenor | 28-Feb-25 | 21-Feb-25 | Change |
|---|---|---|---|
| 1M | 5.01% | 4.96% | 0.06% |
| 3M | 5.28% | 5.29% | -0.01% |
| 6M | 5.61% | 5.59% | 0.02% |
| 1Y | 5.78% | 5.79% | 0.00% |
| 2Y | 5.82% | 5.80% | 0.02% |
| 3Y | 5.85% | 5.84% | 0.01% |
| 4Y | 5.88% | 5.88% | 0.00% |
| 5Y | 5.92% | 5.92% | 0.00% |
| 7Y | 6.00% | 6.01% | -0.01% |
| 10Y | 6.12% | 6.13% | -0.01% |
| 20Y | 6.35% | 6.36% | -0.01% |
| 25Y | 6.35% | 6.36% | -0.01% |
What we can expect
The BTr announced the reissuance of the 5-Year FXTN 7-70 for this week’s auction, with our indicative range at 5.95-6.075%. All eyes are on the local February inflation print. Bangko Sentral ng Pilipinas forecast inflation settling within range 2.20-3.00% last month, while Bloomberg’s consensus estimate is at 2.6%.
At current levels, we remain cautious and maintain a steeper-curve bias. We are looking to de-risk positions, especially given the supply risk from upcoming bond issuances.
Top GS Picks
| Security | Yield to Maturity | Tenor (Years) | Maturity |
|---|---|---|---|
| RTB 5-13 | 5.63% | 0.44 | 12-Aug-25 |
| FXTN 7-62 | 5.75% | 0.95 | 14-Feb-26 |
| RTB 5-15 | 5.79% | 2 | 4-Mar-27 |
| RTB 5-17 | 5.86% | 3.47 | 22-Aug-28 |
| RTB 5-18 | 5.92% | 3.99 | 28-Feb-29 |
| FXTN 20-17 | 5.98% | 6.38 | 19-Jul-31 |
Note: Rates are indicative and subject to refresh.
(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)