THE GOVERNMENT fully awarded the reissued Treasury bonds (T-bonds) it auctioned off on Tuesday at lower yields, with the offer attracting strong demand, as Philippine headline inflation slowed for a second straight month in June.
The Bureau of the Treasury (BTr) borrowed its target P30 billion through the reissued 20-year bonds as the offer was more than twice oversubscribed, with tenders reaching P72.839 billion.
This brought the outstanding volume for this bond series to P522.8 billion, it said in a statement after the auction. It added that it made a full award of the offering as the average yield fetched was below the level awarded at the previous auction.
The reissued papers, which have a remaining life of five years and 11 days, were awarded at an average rate of 6.869%, with accepted yields from 6.839% to 6.88%.
The average yield dropped by 53.1 basis points (bps) from the 7.4% fetched for the series’ last award on June 2 and was 113.1 bps below the 8% coupon rate for the issue.
However, this was 1.2 bps higher than the 6.857% fetched for the same bond series and 5.1 bps above the 6.818% quoted for the five-year debt — the benchmark tenor closest to the remaining life of the papers on offer — at the secondary market before Tuesday’s auction, based on PHL Bloomberg Valuation Service Reference Rates data provided by the BTr.
“The lower bond yield awarded today reflected the continued decline in headline inflation for June,” a bond trader said in a Viber message.
The government fully awarded the T-bonds it offered on Tuesday as the papers were quoted at lower yields and as it saw strong demand, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
He noted that the average rate of the bonds was among two-month lows “in view of the interim US-Iran deal since June 17, 2026 that led to lower global crude oil prices recently and erased almost all the increases since the war in Iran started on Feb. 28, 2026.”
“(T)he highest in long-term local interest rates could have already been seen from May 18-20, 2026 when they reached 7.5-year highs or since November 2018… as the worst could have already been seen in global crude oil prices, as well as in most local financial markets including bond yields, the local stock market, the US dollar-peso exchange rate,” he said.
Lower global energy costs could help ease domestic price pressures, Mr. Ricafort added. Still, the decline in yields was capped by expectations of further tightening by the Bangko Sentral ng Pilipinas (BSP) as the consumer price index (CPI) remains well above its 2%-4% tolerance range despite easing for two consecutive months.
Philippine headline inflation slowed to 6.4% in June from 6.8% in May, but was faster than the 1.4% pace logged in the same month last year, the government reported on Tuesday.
This was below the 6.6% median estimate in a BusinessWorld poll of 18 analysts and also marked the second straight month of deceleration. This was also the slowest since March’s 4.1% print.
However, this marked the fourth month in a row that inflation breached the BSP’s 2%-4% tolerance band.
For the first semester, the CPI averaged 4.8%, also above the BSP’s goal.
The BTr wants to raise P410 billion from the domestic market this month, or P250 billion via Treasury bills and P160 billion through T-bonds.
The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.659 trillion or 5.4% of gross domestic product this year. — Bettina V. Roc