RATES on government securities (GS) to be offered this week may end mixed amid increased auction volume, as the Bureau of the Treasury (BTr) prepares to sell cash management bills again and the United States moves to support long-dated bonds, helping temper the rise in yields.

On Monday, the BTr will auction up to P80 billion in short-term securities.

Of the total, P20 billion will come from 35-day cash management bills (CMBs). The Treasury last sold CMBs on July 20.

It will also offer up to P60 billion in Treasury bills (T-bills), with the government looking to raise P20-25 billion from 91-day papers, P15-20 billion from 182-day securities, and P7-15 billion from 364-day debt.

On Tuesday, the government is targeting to borrow P30 billion from reissued seven-year Treasury bonds (T-bonds) with a remaining life of three years and one month.

Debt yields could be mixed or slightly lower, tracking secondary market movements, after the US Treasury announced that it would increase buybacks of long-term US government bonds to help bring down yields after a global rout, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said this could help reduce borrowing costs around the world, including in markets that often take cues from US rate moves.

“The government securities (GS) market traded 3 basis points (bps) lower as it tracked US Treasury movements as US Treasury Secretary Bessent announced a surprise increase in long-term bond buybacks. Nonetheless, players used the opportunity to lighten positions,” a trader said in an e-mail. “Price action was generally two-way but offers were noticeably heavy.”

The trader said the reissued bonds to be sold this week could draw good demand and fetch rates of 6.775% to 6.8%.

At the secondary market on Thursday, yields on the 35-day and 91-day tenors rose by 3.56 bps and 5.39 bps week on week to 4.7644% and 5.0025%, according to PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System website.

Meanwhile, the 182-day and 364-day T-bills declined by 1.73 bps and 5.78 bps to 5.3212% and 5.6593%.

The seven-year bond rose by 3.84 bps to 7.2124%, while the three-year tenor, the closest to the remaining life of the bond series on offer on Tuesday, edged up by 1.23 bps to 6.6877%.

Mr. Ricafort said inflation concerns could also influence yield movements as the Middle East war continues, while traders are also watching the Bangko Sentral ng Pilipinas’ (BSP) policy move this week and its guidance for the coming months.

The government last offered 35-day cash management bills on July 20, when it raised P20 billion as planned at an average rate of 4.816%. The Treasury resumed offering CMBs in June for the first time since the pandemic to manage short-term liquidity needs amid elevated interest rates.

Meanwhile, last week, the BTr raised P54.8 billion from the T-bills it auctioned off, above the P46 billion on offer, as total tenders reached P167.016 billion. The government doubled its acceptance of noncompetitive bids for the six-month and one-year tenors to P12 billion and P5.6 billion, respectively.

The Treasury borrowed P24 billion as planned through the 91-day T-bills, as bids for the tenor reached P42.7 billion. The three-month paper fetched an average rate of 5.008%, up by 1.3 bps from the previous week. Bids accepted had yields from 4.9% to 5.026%.

For the 182-day debt, the government raised P21 billion, above the P15-billion plan, as tenders hit P84.09 billion. The average yield on the six-month T-bill was 5.442%, down by 10.3 bps from the last auction. Tenders awarded had rates from 5.4% to 5.463%.

Lastly, the BTr sold P9.8 billion in 364-day securities, above the P7-billion program, as demand for the tenor totaled P40.226 billion. The one-year paper fetched an average rate of 5.613%, down by 1.8 bps week on week. Accepted yields ranged from 5.595% to 5.633%.

The reissued seven-year T-bonds due to be offered on Tuesday were last auctioned on July 28, when the government raised a total of P40 billion, including P30 billion through the regular auction and P10 billion from a tap facility offering. The papers fetched an average yield of 7.217%, above the 7% coupon rate.

The Treasury plans to raise P330 billion from the domestic market this month, consisting of P200 billion through T-bills and P130 billion through T-bonds.

The government borrows from local and foreign sources to help finance its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year. — Aaron Michael C. Sy