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RATES of the Treasury bills (T-bills) and Treasury bonds (T-bonds) on offer this week could end mixed before an expected cut by the Bangko Sentral ng Pilipinas (BSP) at its meeting on Thursday.

The Bureau of the Treasury (BTr) will auction off P25 billion in T-bills on Monday, or P8 billion each in 91- and 182-day papers and P9 billion in 364-day papers.

On Tuesday, the government will offer P30 billion in reissued 10-year T-bonds with a remaining life of nine years and 10 months.

This week’s T-bill and T-bond auction rates could track the mixed movements at the secondary market, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

At the secondary market on Friday, yields on the 91- and 182-day T-bills eased by 0.09 basis point (bps) and 3.97 bps week on week to end at 5.4404% and 5.57%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data as of June 13 published on the Philippine Dealing System’s website. Meanwhile, the 364-day tenor went up by 1.02 bps to end at 5.6916%.

For its part, the rate of the 10-year bond rose by 5.06 bps week on week to close at 6.3503%.

Yields on shorter benchmark tenors went down on expectations that the Bangko Sentral ng Pilipinas (BSP) will reduce borrowing costs this week, Mr. Ricafort said.

Meanwhile, rates of longer bonds rose due to concerns over the conflict in the Middle East as Israel and Iran exchanged attacks over the weekend, he added.

The reissued 10-year T-bonds on offer on Tuesday could be “fairly received” and fetch rates ranging from 6.35% to 6.4%, a trader said in an e-mail.

“For the Monetary Board meeting, the general view still weighs on a 25-bp cut, although we view a shallow room for a rally as we suspect a heavy borrowing schedule from the BTr in the third quarter,” the trader added.

The BSP is widely expected to deliver a second straight rate cut at its policy meeting on Thursday amid cooling inflation and weak economic growth in the first quarter, analysts said.

A BusinessWorld poll conducted last week showed that 15 out of 16 analysts see the Monetary Board bringing down the target reverse repurchase rate by 25 bps at its policy meeting on June 19 to 5.25% from the current 5.5%.

The Monetary Board resumed its easing cycle with a 25-bp rate cut in April following a surprise pause in February due to uncertainties over the impact of the Trump administration’s trade policies on the Philippine economy.

The central bank has reduced borrowing costs by a total of 100 bps since it began its easing cycle in August 2024. BSP Governor Eli M. Remolona, Jr. has said that they may cut rates two more times this year in “baby steps” or increments of 25 bps at a time as the benign inflation outlook gives them ample room to shift to a more accommodative monetary policy stance.

Last week, the BTr raised P28.6 billion from the T-bills it auctioned off, higher than the P25-billion plan. The offer was nearly four times oversubscribed, with total bids reaching P98.259 billion.

Broken down, the Treasury borrowed the programmed P8 billion via the 91-day T-bills as tenders reached P20.23 billion. The three-month paper was quoted at an average rate of 5.451%, 0.1 bp lower than the previous auction. Tenders accepted by the BTr carried yields of 5.424% to 5.469%.

The government likewise made a full P8-billion award of the 182-day securities it auctioned off as bids amounted to P38.58 billion. The average rate of the six-month T-bill was at 5.524%, down by 4.1 bps from the previous week, with accepted rates ranging from 5.522% to 5.543%.

Lastly, the Treasury raised P12.6 billion via the 364-day debt papers, higher than the P9-billion plan, as demand for the tenor totaled P39.449 billion. The average rate of the one-year T-bill declined by 2.4 bps to 5.656%, with bids accepted having yields of 5.635% to 5.673%.

Meanwhile, the reissued 10-year T-bonds to be offered on Tuesday were last auctioned off on May 20, where the BTr raised P30 billion as planned at an average rate of 6.226%, below the 6.375% coupon rate. It also borrowed another P10 billion via the same papers at a tap facility offer held on the same day as it took advantage of the strong demand seen for the bonds during the regular auction proper.

The Treasury wants to raise P230 billion from the domestic market this month, or P100 billion through T-bills and P130 billion via T-bonds.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy