The Marcos Jr. administration fell short of its planned borrowing of up to ₱39 billion on Monday, May 11, as demand for short-dated debt papers remained weak and interest rates continued to climb following the Bangko Sentral ng Pilipinas’ (BSP) policy hike.

During the latest treasury bills (T-bills) auction, the Bureau of the Treasury (BTr) raised only ₱28.3 billion. This sustained the trend from the May 4 auction, when the government also failed to meet its borrowing target.

Total bids for the auction reached ₱44.9 billion, about 1.4 times the amount offered, which remained relatively flat compared to the ₱44.3-billion demand in the previous week.

The BTr awarded ₱12 billion for benchmark 91-day T-bills, meeting the full offering. Total tenders for this tenor reached ₱24.1 billion, with the average rate jumping to 4.85 percent from 4.711 percent last week.

For 182-day debt papers, the BTr raised ₱9.8 billion, short of the ₱10-billion offer. Bids reached ₱14.3 billion, with the average rate rising to 5.27 percent, up 30.6 basis points (bps) rom last week’s 4.964 percent.

Meanwhile, the BTr struggled to find ample demand for 364-day IOUs, awarding only ₱6.51 billion against its minimum ₱10-billion plan, as demand for the tenor reached only the same as the awarded amount.

For the one-year bill, the average rate climbed by 34.2 bps to 5.719 percent from 5.377 percent in the previous auction.

PHP Bloomberg Valuation (PHP BVAL) Reference Rates as of May 11 showed that 91-, 182-, and 364-day T-bills were quoted at 4.8 percent, 5.237 percent, and 5.43 percent, respectively, with auction yields continuing to settle above these secondary market benchmarks.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said T-bill yields posted a third straight weekly increase as market rates continued to reflect the impact of the BSP’s recent 25-basis-point (bp) rate hike to 4.5 percent.

Expectations of further tightening if inflation remains above target or geopolitical tensions persist also exert pressure on borrowing costs.

The government 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, higher than the ₱324 billion eyed in the previous quarter. T-bills will account for 46.4 percent of the ₱784-billion total domestic borrowing program from April to June.

Meanwhile, the government has scaled back its long-term borrowing plans, with treasury bond (T-bond) offerings set at ₱420 billion, down from the previous quarter’s ₱500 billion.

In total, the domestic borrowing plan for the second quarter accounts for nearly 30 percent of the government’s ₱2.68-trillion annual financing requirement for 2026.

National Treasurer Sharon P. Almanza reaffirmed the BTr’s commitment to maintaining a stable and resilient debt market amid global uncertainties tied to geopolitical tensions.

“As we navigate these challenging times, the BTr remains committed to upholding market stability, implementing sound debt strategies and further strengthening trust and confidence in the country’s financial systems,” Almanza said at a recent Money Market Association of the Philippines (MART) event.

According to the BTr, the government will ramp up efforts to deepen the capital market through liability management transactions, reforms in bond pricing conventions, expansion of the repo market, and continued digital innovations.