UMVA has learned that this week’s Treasury bill and bond auctions could close with mixed results as geopolitical tensions flare and inflation data looms.
The Treasury will unleash up to P47 billion in bills on Monday, splitting the offering between P15‑20 billion of 91‑day notes, P12‑17 billion of 182‑day securities, and P7‑10 billion of 364‑day debt.
On Tuesday, officials aim to tap P30 billion from reissued 20‑year bonds that carry just over five years of remaining life.
Market watchers expect yields on the reissued bonds to hover between 7.375% and 7.425%, a spread sharpened by forecasts of faster‑rising May inflation, a bond trader disclosed.
In the secondary market on Friday, 91‑day and 182‑day bill yields slipped 6.7 and 5.52 basis points week‑on‑week, settling at 4.9893% and 5.4041% respectively, while the 364‑day paper jumped 15.33 basis points to 6.1067%.
The 20‑year bond yield eased 9.77 basis points to 7.5829%, and the five‑year benchmark, closest to the reissued debt’s remaining term, fell 11.63 basis points to 7.3377%.
Inflation could crest a three‑year high in May, driven by soaring energy costs and a weakening peso amid the Middle East conflict.
A poll of economists projects the May consumer price index at 7.9%, up from 7.2% in April and sharply above the central bank’s 2‑4% target.
That pace would be the fastest since February 2023 and would sit at the upper edge of the central bank’s forecast range.
Last week’s bill auction raised P32.78 billion, shy of the P35 billion goal, even as total bids reached P68.32 billion.
The 90‑day bills met their P15 billion target, attracting P30.29 billion in bids and fetching an average rate of 5.142%, a rise of 6.8 basis points.
The 181‑day issue also hit its P13 billion quota, with P31.25 billion in tenders and an average rate of 5.7%, down 19.4 basis points.
Conversely, the 363‑day securities fell short, selling only P4.78 billion against a P7 billion offering, while bids totaled P6.78 billion and the average yield climbed to 6.163%.
The reissued 20‑year bonds, last auctioned in mid‑April, raised P30 billion at an average rate of 6.328%, prompting the Treasury to open a tap facility for an additional P10 billion at the same rate.
Overall, the Treasury targets P268 billion in domestic funding this month, split between P128 billion in bills and P140 billion in bonds.
This borrowing supports a budget deficit capped at P1.61 trillion, roughly 5.3% of GDP for the year.
