Cautious investor demand caused the Marcos Jr. administration to once again fall short of its planned ₱27-billion borrowings from short-term debt papers on Monday, March 23, as interest costs continued to rise across the board.

During the latest treasury bills (T-bills) auction, the government raised only ₱21.7 billion across three tenors.

It bears noting that this is the third consecutive week that the government has faced difficulty borrowing its programmed amount.

Total bids reached ₱36.7 billion, roughly 1.4 times the amount of IOUs offered, but slightly lower than the ₱36.8 billion tendered during the previous T-bills auction last March 16.

The Bureau of the Treasury (BTr) fully awarded the ₱9-billion offering for the benchmark 91-day T-bills. Total tenders for this tenor reached ₱16.6 billion. The average rate rose to 5.004 percent from 4.9 percent last week.

For 182-day government securities (GS), the BTr also raised the full ₱9-billion offered amount. Bids reached ₱13.8 billion, fetching an average rate of 5.032 percent, which is 8.4 basis points (bps) higher than the previous auction’s 4.948 percent.

Lastly, the BTr awarded just ₱3.7 billion out of its ₱9-billion 364-day T-bill offering. Demand for the tenor reached ₱6.3 billion, with the average rate increasing by 10 bps to 5.166 percent from 5.066 percent in the previous auction.

PHP Bloomberg Valuation (PHP BVAL) Reference Rates for March 23 showed that 91-, 182-, and 364-day T-bills were quoted at 4.981 percent, 4.958 percent, and 5.089 percent, respectively.

Across the board, average rates at the auction remained higher than these secondary market rates.

Notably, average rates for all tenors remained significantly higher than the 4.25-percent benchmark rate.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the relatively low demand reflects market cautiousness.

“With global rates staying higher for longer, investors are demanding more yield, so the BTr is choosing to be selective rather than borrow at any cost,” Ravelas said.

According to Ravelas, soaring borrowing costs reflect inflation and US Federal Reserve uncertainty, “not a funding problem” on the part of the government, but he warned of the likelihood of more expensive borrowing costs.

“For now, government cash buffers remain healthy—but borrowing will stay expensive in the near term,” said Ravelas.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), yields have increased for the fourth straight week following the surge in global oil prices to their highest level in four years.

This heightened risk of tighter monetary policy has also contributed to higher auction yields. Maybank, for one, expects the Bangko Sentral ng Pilipinas (BSP) to raise the policy rate by 25 bps to 4.5 percent, citing the Philippines’ high vulnerability to oil price surges due to its heavy dependence on oil sourced from the Persian Gulf in the Middle East.