The Marcos Jr. administration fell short of its planned ₱31-billion borrowing on Monday, May 4, as demand dropped significantly for short-dated debt papers amid rising interest rates following the Bangko Sentral ng Pilipinas (BSP) policy hike.

The Bureau of the Treasury (BTr) raised only ₱28.1 billion during its latest auction, ending the positive momentum seen in the April 27 auction, when the government was able to borrow beyond programmed amounts.

Total bids reached ₱44.3 billion, about 1.4 times the amount offered, easing significantly from the ₱73.5-billion demand the previous week.

The BTr awarded ₱12 billion for the benchmark 91-day T-bills, meeting the ₱12-billion offer. Total tenders for this tenor reached ₱20.4 billion, with the average rate rising to 4.711 percent from 4.558 percent last week.

For 182-day debt papers, the BTr raised ₱9.7 billion, slightly below the ₱10-billion offer. Bids reached ₱16 billion, with the average rate increasing to 4.964 percent, up 22.7 basis points (bps) from the previous week’s 4.737 percent.

Meanwhile, the BTr further scaled down awards for 364-day IOUs, awarding only ₱6.4 billion against its ₱9-billion plan, as demand for the longest T-bill tenor reached just ₱7.9 billion. The average rate climbed by 19.3 bps to 5.377 percent from 5.184 percent in the previous auction.

PHP Bloomberg Valuation (PHP BVAL) Reference Rates as of May 4 showed that 91-, 182-, and 364-day T-bills were quoted at 4.622 percent, 4.76 percent, and 5.214 percent, respectively, with auction yields settling above these secondary market benchmarks.

This comes amid expectations of higher borrowing costs following the benchmark rate adjustment to 4.5 percent, which has raised expectations of further policy tightening should inflation remain above the two- to four-percent target range.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the rise in borrowing costs for the second straight week comes amid the BSP’s recent policy rate hike to 4.5 percent and expectations of further tightening if inflation remains above the four-percent ceiling.

The BTr is ramping up its domestic fund-raising efforts for the second quarter of 2026, planning to borrow ₱364 billion via T-bills during the period, a 12.3-percent increase from the ₱324 billion targeted in the first quarter. T-bills will account for 46.4 percent of the ₱784-billion total domestic borrowing program for the quarter.

Meanwhile, the government has scaled back its long-term borrowing plans, with treasury bond (T-bond) offerings set at ₱420 billion, down 16 percent from the previous quarter’s ₱500 billion. The total domestic borrowing plan for the second quarter accounts for nearly 30 percent of the government’s ₱2.68-trillion annual financing requirement.