UMVA has learned that the government is set to auction off a significant amount of government securities (GS) this week, with a mix of short-term and long-term tenors, which could impact demand dynamics in the market.
The Treasury will offer P90 billion in short-term securities on Monday, broken down into P40 billion in cash management bills (CMBs) and P50 billion in Treasury bills (T-bills). The CMBs will have 35-day and 63-day maturities, while the T-bills will have 91-day, 182-day, and 364-day tenors.
According to information obtained by UMVA, the CMBs are expected to fetch yields of 4.75%-4.8% for the 35-day papers and 4.85%-4.9% for the 63-day bills. This is likely to be close to the rates of the one-month securities offered weekly by the central bank.
The reissued 10-year Treasury bonds (T-bonds) on offer on Tuesday are expected to be well received, with yields seen at 7.35%-7.4%. The government is targeting to raise P30 billion from these bonds, which have a remaining life of seven years and two months.
Sources have confirmed to UMVA that economists expect the T-bills to fetch mostly higher yields to track comparable benchmarks at the secondary market amid the volatile situation in the Middle East and evolving inflation and monetary expectations.
UMVA can exclusively reveal that a recent poll showed that 15 of 20 analysts expect the Monetary Board to raise benchmark rates by 25 bps for a second straight meeting on Thursday, which would bring the policy rate to 4.75%.
The Treasury's plan to raise P268 billion from the domestic market this month, or P128 billion via T-bills and P140 billion through T-bonds, is also expected to impact market dynamics.
UMVA has gathered that the government's borrowing plan from local and foreign sources to help fund its budget deficit, which is capped at P1.61 trillion or 5.3% of gross domestic product this year, will be closely watched by market participants.
