RATES of Treasury bills (T-bills) and Treasury bonds (T-bonds) could end mostly lower at separate auctions this week after the Bangko Sentral ng Pilipinas (BSP) signaled two more rate cuts this year.
T-bill and T-bond rates could follow the mixed week-on-week movements at the secondary market amid dovish signals from the BSP, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a Viber message.
The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday — P8 billion each in 91- and 182-day debt and P9 billion in 364-day securities.
On Tuesday, the government will sell P30 billion in reissued 10-year T-bonds with a remaining life of seven years and two months.
At the secondary market, the 91-day T-bill slipped 0.86 basis point (bp) to 5.4708%, based on PHP Bloomberg Valuation (BVAL) service reference rate data as of June 27 posted on the Philippine Dealing System website.
The 182- and 364- day T-bills added 1.96 bps, and 0.44 bp to end at 5.6616% and 5.6999%, respectively, based on the Bloomberg service.
The 10-year bond dropped 8.69 bps to 6.2331%, while the seven-year note, the closest to the T-bond’s remaining life, fell 2.83 bps to 6.0758%.
In an e-mail, a trader said strong interest in long-term debt may persist, although yields could rise due to an anticipated surge in liquidity.
BSP Governor Eli M. Remolona, Jr. said last week there is room for two more rate cuts this year as inflation is expected to remain within the 2-4% target and due to the government’s lowered economic growth expectations.
The BSP last month cut the target reverse repurchase rate by 25 bps to 5.25% amid an easing inflation outlook and weaker-than-expected first-quarter economic growth.
The Development Budget Coordination Committee (DBCC) trimmed the Philippines’ gross domestic product (GDP) growth target to 5.5-6.5% this year, down from the earlier 6-8% forecast, citing heightened global uncertainties from US trade policy shifts and war in the Middle East. For 2026 to 2028, the DBCC also narrowed the growth forecast to 6-7%, from 6-8%.
June inflation rose to 1.4% from 1.3% in May, still below 3.7% last year. This was the fourth straight month inflation stayed below the Bangko Sentral ng Pilipinas’ 2-4% target. Year-to-date inflation averaged 1.8%.
On the borrowing front, the BTr raised only P23.95 billion from T-bills last week, falling short of the P25-billion target, despite total bids reaching P56.84 billion.
The Treasury partially awarded the 91-day debt, citing high yield demand. “Players asked for yields higher than secondary market levels,” the BTr said. It awarded only P6.95 billion, below the P8-billion goal, with an average rate of 5.526%.
The government fully raised P8 billion from the 182-day T-bills with an average yield of 5.607%, while also awarding P9 billion from 364-day securities at an average of 5.651%.
A reissued bond set for auction on Tuesday was last offered on June 10, when the BTr raised P30 billion at an average of 6.124%, below the bond’s 6.75% coupon.
The BTr plans to raise P250 billion from the domestic market this July — P125 billion in T-bills and P125 billion in T-bonds — to help fund the government’s P1.56-trillion budget deficit, equivalent to 5.5% of GDP. — Aaron Michael C. Sy
