THE GOVERNMENT made a partial award of the Treasury bills (T-bills) it offered on Monday amid weak demand and as the market wanted higher yields, with sharply faster September inflation raising expectations of further rate hikes from the Philippine central bank.
The Bureau of the Treasury (BTr) borrowed only P39.917 billion from the T-bills it auctioned off, short of the P45-billion target, even as total tenders reached P61.232 billion. This was lower than the P68.587 billion in bids seen for the P42-billion offer last week.
It partially awarded the 91- and 182-day tenors to cap the accepted yields, it said in a statement.
Broken down, the Treasury raised just P16.94 billion via the 91-day T-bills, lower than the P20-billion plan, with demand for the tenor reaching P22.1 billion. The three-month paper fetched an average rate of 5.845%, rising by 17.8 basis points (bps) from 5.667% last week. Bids accepted had yields from 5.74% to 5.9%.
For the 182-day debt, the government borrowed only P12.987 billion, below the P15-billion program even as tenders hit P21.787 billion. The average yield on the six-month T-bill was at 6.171%, climbing by 20 bps from 5.971% previously. Tenders awarded carried rates from 6% to 6.25%.
Meanwhile, the BTr sold its target P10 billion in 364-day papers as bids for the tenor totaled P17.345 billion. The one-year paper fetched an average rate of 6.351%, increasing by 13.7 bps from 6.214% last week. Accepted bid yields were from 6.175% to 6.443%.
At the secondary market before Monday’s auction, the 91-, 182-, and 364-day T-bills were quoted at 5.7615%, 6.092%, and 6.2081%, respectively, based on PHP Bloomberg Valuation Service Reference Rates data from the Treasury.
“Demand went down compared to last week, reflecting the lack of market activity today,” a trader said in a text message.
The government made a partial award as T-bill yields rose, reflecting prospects of further rate hikes from the Bangko Sentral ng Pilipinas (BSP) after inflation accelerated sharply in September, with the ongoing conflict in the Middle East also expected to stoke price pressures further, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Headline inflation picked up to an over three-year high of 7.2% in September from 6.1% in August, matching this year’s peak first recorded in April.
This was sharply faster than the 1.7% clip seen in September 2025. Headline inflation has now held above the central bank’s 3% target for a seventh straight month.
The BSP has so far delivered a total of 75 bps in rate increases since it began tightening in April, when inflation accelerated faster than it anticipated due to spillover effects from the Middle East war.
The Monetary Board will hold its next rate-setting meeting on Oct. 22
On Tuesday, the government is looking to raise P35 billion from a dual-tenor Treasury bond (T-bond) auction, or P25 billion via seven-year debt with a remaining life of three years and nine months, and P10 billion through 25-year notes with a remaining life of 23 years and three months.
The BTr targets to raise P418 billion from the domestic market this month, or P168 billion via T-bills and P250 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. — Aaron Michael C. Sy