The national government failed to sell all its short-term debt papers after banks demanded for higher returns following the Israel-Hamas war that led investors to favor safer investment options.

At Monday's auction of Treasury bills on Oct. 9, the national government raised a total of P12.518 billion,  below the P15 billion program. Total demand reached P22.564 billion.

The 91-day Treasury bill rate rose anew to 5.806 percent from 5.698 percent last week.

The Treasury sold P4.788 billion worth of three-month debt papers, below the P5 billion on offer. However, investors were asking for P6.898 billion of government security or IOU.

The yield on the 182-day T-bill also inched up to 6.115 percent from the previous 6.023 percent as investors were willing to buy P7.646 billion of the six-month IOUs. The government awarded only P4.410 billion, below the P5 billion on offer.

Lastly, there was also a slight increase in the average yield for the one-year T-bills, increasing from 6.215 percent a week ago to 6.305 percent.

The Treasury raised P3.320 billion by selling 364-day IOUs, also below the target of P8.020 billion.

Meanwhile, at the Bloomberg Valuation Service (BVAL), the yield on the three-month bill was lower at 5.712 percent, while the yield on the six-month bill stood at 6.011 percent.

The average rate for the 12-month bill was also lower in the secondary market at 6.244 percent.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said that the Hamas-Israel conflict prompted investors to avoid a potential geopolitical risk in the Middle East that includes Iran, which is among the world’s largest oil producers and financier of Hamas.

He also added that higher interest rates could be due to recent indications from the local monetary authorities of “a possible reduction in banks' reserve requirement ratio next year or if there is no more need for restrictive monetary policy.”

The Land Transportation Franchising and Regulatory Board's recent approval of the provisional P1 jeepney fare hike also became a factor in higher interest rates, Ricafort added.