The Treasury announced that the outstanding volume for the bond series reached P522.8 billion after the latest auction, with a full award as the average yield fell below the previous auction’s level.
The reissued Treasury bonds, carrying a remaining maturity of five years and 11 days, were awarded at an average yield of 6.869%, with individual yields ranging from 6.839% to 6.88%.
This average represents a decline of 53.1 basis points from the 7.4% yield recorded on June 2, and it sits 113.1 basis points below the bond’s 8% coupon rate.
Compared with secondary‑market rates, the auction yield was 1.2 basis points higher than the 6.857% observed for the same series and 5.1 basis points above the 6.818% quoted for the comparable five‑year benchmark tenor before the auction.
A bond trader attributed the lower yield to the continued decline in headline inflation for June.
Government officials noted that strong demand and lower quoted yields allowed the Treasury to fully award the bonds offered on Tuesday.
The average rate was among the lowest in two months, reflecting the impact of the interim US‑Iran agreement signed on June 17, which helped reduce global crude‑oil prices.
Analysts observed that long‑term local interest rates may have peaked in late May, with broader financial markets, including bond yields and the peso exchange rate, responding to lower oil prices.
While reduced global energy costs could ease domestic price pressures, expectations of further monetary tightening by the central bank remain, as consumer‑price inflation stays above the 2%–4% target range.
Headline inflation slowed to 6.4% in June from 6.8% in May, marking the second consecutive month of deceleration and the slowest pace since March’s 4.1% reading, though it remains above the tolerance band for the fourth month in a row.
For the first half of the year, the consumer‑price index averaged 4.8%, still exceeding the central bank’s goal.
The Treasury aims to raise P410 billion from the domestic market this month, split between P250 billion in Treasury bills and P160 billion in Treasury bonds.
The government relies on both local and foreign borrowing to finance its budget deficit, projected at P1.659 trillion, equivalent to 5.4% of GDP for the year.
