The Bureau of the Treasury will auction up to P90 billion in short-term government securities on Monday, resuming cash management bill offerings amid renewed market volatility linked to the Middle East conflict.
The combined offering includes up to P40 billion in cash management bills, split between P20 billion in 35-day papers and P10–20 billion in 63-day securities. The remaining P50 billion will come from Treasury bills: P20 billion each in 91- and 182-day debt, and P10 billion in 364-day papers.
Cash management bills were first revived in June after being dormant since the pandemic, used to manage short-term liquidity under elevated rate conditions, but were absent from the past two auctions.
On Tuesday, the government will offer P30–40 billion in reissued seven-year Treasury bonds with a remaining life of four years and five days.
Traders expect upward pressure on yields due to the larger bond auction size and the return of cash management bills after a two-week pause. One noted a slow grind higher unless positive developments emerge in the Middle East.
Secondary market movements were mixed last week, with renewed inflation concerns following clashes between the United States and Iran. The one-month bill eased 3.11 basis points to 4.7243%, while 91- and 364-day bills rose 0.24 and 2.93 basis points to 5.0601% and 5.9811%, respectively.
The 182-day bill dropped 4.52 basis points to 5.5324%. The seven-year bond climbed 15.95 basis points to 7.3008%, and the four-year tenor jumped 17.75 basis points to 7.014%.
At the last cash management bill auction on June 29, the government raised P30 billion against P56.28 billion in tenders. The 35-day paper averaged 4.797%, while the 63-day security averaged 5.081%.
Last week’s Treasury bill auction drew P126.09 billion in bids, more than double the P50 billion borrowed. The 91-day tenor averaged 5.097%, the 182-day 5.707%, and the 364-day 5.972%.
The seven-year bonds to be offered Tuesday were last sold June 23 at an average rate of 6.816%, above the 6.375% coupon. The Treasury targets P410 billion from the domestic market this month, split between P250 billion in bills and P160 billion in bonds.
Government borrowing supports a budget deficit capped at P1.659 trillion, or 5.4% of GDP, funded through local and foreign sources.
