PHOTOS Treasury bills (T-bills) and Treasury bonds (T-bonds) will be sold this week. may end up mixing during inflation and rate the raise bet.
The Bureau of the Treasury (BTr) will sell up to P60 billion in bonds on Monday, or P20 billion each in 91- and 182-day notes and P10-20 billion in 364-day notes.
It will not sell money management bills (CMBs) this week after offering them weekly and T-bills from June 15 to raise short-term funds amid market volatility stemming from the Middle East war. The CMBs sold by the government last month had tenors of 35 days and 63 days.
On Tuesday, the government aims to raise P30 billion in the reissuance of 20-year T-bonds with five years and 11 days remaining.
Yields on T-bills and T-bonds can track mixed weekly movements in the secondary market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The average auction rate for the upcoming Treasury bill may adjust slightly lower or (change) slightly after comparing the short-term estimate of PHP BVAL (Bloomberg Valuation Service) slightly lower each week… ahead of the latest consumer price index (CPI) for June 2026 which may decrease from 6.8% in May 2026 as the price of oil has fallen sharply recently due to the drop in global oil prices. The war in Iran started on Feb. 28 which also led to a large recovery in the local fuel pump price,” he said.
Meanwhile, the 20-year reissued bonds could earn a higher yield equal to the week-to-week rise in the five-year credit rate in the secondary market and track the higher US Treasury yield amid possible rate hikes by the Federal Reserve in coming months following hawkish signals from policymakers, Mr. Ricafort added.
The trader said in an email that the T-bond offering would be well received and fetched rates from 6.9% to 6.95% “on good volume.”
“The CPI data will be the trigger for the near term,” the trader said.
In the secondary market on Friday, the yield on 91-, 182-, and 364-day T-Bills decreased by 6.83 basis points (bps), 4.35 bps, and 2.84 bps week-on-week to close at 5.1237%, 5.5307%, and 5.5307% according to PHP 5.9477 as of reference on July 3, PHP respectively published on the website of the Philippine Dealing System.
For its part, the 20-year bond rose 13.79 bps on the week to end at 7.0377% on Friday, while the five-year note, the tenor closest to the remaining life of the notes offered this week, rose 10.07 bps to 6.8291%.
The Philippine Statistics Authority will release the inflation report for June on Tuesday (July 7).
Inflation in the Philippines may have cooled for a second straight month to enter a three-month low in June as oil and rice prices continued to weaken, analysts said. A BusinessWorld a survey of 18 analysts showed an average estimate of 6.6% CPI for June, slower than 6.8% in May but faster than 1.4% last year.
If possible, this would be within the Bangko Sentral ng Pilipinas’ (BSP) projection of 6%-7% for the month and would be the slowest headline print in three months or from 4.1% in March.
However, this will be the fourth month in a row that it has breached the central bank’s 2%-4% tolerance.
Meanwhile, Federal Reserve Chairman Kevin Warsh said on Wednesday he would stick to the 2% US central bank rate and “disappoint” anyone expecting looser monetary policy despite President Donald J. Trump’s call for interest rate cuts, Reuters reported.
When asked if the power of embarrassment passed to Mr. Trump, who picked Mr. Warsh to take over as head of the Fed and said he expected borrowing costs to come down, Mr. Warsh said, “we’ve been a big private bank for a long time. We’re going to be a private bank right now and you’re not going to see any changes to that.”
Public appearance in Portugal, Mr. Warsh, since taking over as Fed chief in May, has seen him join other central bankers in what has become a general rejection of “forward direction” and a seeming reluctance to even say much about the economy.
Mr. Warsh said that the central banks of the US will decide whether to raise rates, for example, when they “close the door” and start their next two-day meeting on July 28, and told the president of the panel that he will “fail” to violate his rule against commenting on rate decisions or even risks and factors that set the debate.
Traders slightly reduced their bets on the rate of increase as Mr. Warsh said, but they still put a 70% chance of the Fed raising borrowing costs at its September 15-16 meeting.
Last week, BTr raised the planned P60 billion of Treasury bills it issued as tenders reached P122.608 billion.
Once discounted, the Department of Finance borrowed P20 billion in T-day-91 loans as the tenor demand reached P36.79 billion. The three-month paper fetched an average yield of 5.245%, up 2.8 bps from 5.217% at the last auction. Bids received ranged from 5.18% to 5.28%.
In this 182-day loan, the government raised P20 billion as the tenders reached P41.895 billion. The average six-month T-bill rate was at 5.764%, up 1 bp from 5.754% previously. Tenders are offered with rates ranging from 5.673% to 5.8%.
Finally, BTr also sold P20 billion in 364-day securities as tenor bids reached P43.923 billion. The one-year paper fetched an average yield of 5.968%, down 6.6 bps from 6.034% last week. Accepted bids ranged in yield from 5.96% to 5.98%.
Meanwhile, the reissued 20-year T-bonds will be offered on Tuesday and last offered on June 2, where the government raised a total of P39.499 billion as it made the full P30-billion award in the relevant auction and sold another P9.499 billion through its tap at an average rate of 7.4%, below its average of 8%.
BTr wants to raise P410 billion in the domestic market this month, or P250 billion in T-bills and P160 billion in T-bonds.
The government is borrowing from local and foreign sources to help finance its budget deficit, which stands at P1.659 trillion or 5.4% of gross domestic product this year. – Aaron Michael C. Sy with Reuters
