Despite weaker investor demand and marginally higher interest costs, the government continued exceeding its ₱25-billion borrowing target, raising ₱26.7 billion from short-term debt papers, as it took advantage of still relatively stable borrowing costs ahead of potential inflation pressures and delayed interest rate cuts due to global factors.

At the latest Treasury bills (T-bills) auction on Monday, June 16, the Bureau of the Treasury (BTr) awarded more than its planned fund-raising, with total bids reaching ₱74.2 billion, just nearly three times the amount offered.

This week’s total bids were lower than the ₱98 billion in tenders from the previous T-bill auction on June 9.

The government awarded ₱6.5 billion, falling short of the ₱8-billion offering for 91-day T-bills. Total tenders reached ₱19.4 billion. The average rate was 5.459 percent, slightly higher than the previous week’s 5.451-percent rate.

Notably, the BTr awarded ₱11.2 billion for 182-day debt papers, exceeding the ₱8 billion offered amount. Bids reached ₱29.7 billion. It fetched an average rate of 5.523 percent, slightly lower than last week’s 5.524 percent.

Previously awarded above the target, the BTr now borrowed the planned ₱9 billion through 364-day IOUs. Demand reached ₱25.1 billion. The average rate inched up slightly to 5.657 percent from 5.656 percent in the previous auction.

Prior to Monday’s auction, PHP Bloomberg Valuation (PHP BVAL) Reference Rates showed that the 91-, 182-, and 364-day T-bills were quoted at 5.440 percent, 5.570 percent, and 5.692 percent, respectively.

Only the benchmark rate for the three-month government securities dropped from the previous week. Benchmark rates for the six-month and one-year securities went up.

The average rate for three-month T-bills was lower than the key borrowing costs of 5.5 percent. Meanwhile, longer-dated IOUs stood higher than the benchmark.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), T-bill auction yields saw marginal increases, remaining largely stable after the recent Israel-Iran conflict pushed global crude oil prices to their highest in four months and the US dollar-peso exchange rate to ₱56.50:$1.

Ricafort said this development could lead to higher import costs and inflation, potentially affecting future US Federal Reserve (Fed) and Bangko Sentral ng Pilipinas (BSP) rate cuts. The markets are eyeing a possible quarter point cut in the upcoming June 19 policy meeting.