The government fully awarded its ₱40 billion offering of Treasury bills on Monday, as investors demanded higher yields amid mounting domestic inflation concerns and weakening currency.

The Bureau of the Treasury raised the entire ₱40 billion on offer at its June 1 auction, staging a full recovery from the previous week's sale on May 25, when the government fell short of its ₱35 billion fundraising target.

Total bids reached ₱70.5 billion, representing an oversubscription rate of 1.8 times the amount on offer, up from the ₱68.4 billion in total demand generated a week earlier.

Yields across all tenors settled above their secondary market benchmarks, reflecting investor hesitation to lock in lower rates as consumer price pressures intensify. The Bangko Sentral ng Pilipinas recently projected that May inflation could accelerate to between 7.1 percent and 7.9 percent, threatening to breach April's already elevated 7.2 percent rate.

The Treasury awarded the planned ₱20 billion in 91-day debt papers against ₱36.1 billion in total tenders. The average rate for the three-month bill edged up to 5.143 percent from 5.142 percent at the prior auction.

For the 182-day papers, the government raised the full ₱13 billion offering on ₱22.8 billion in bids, with the average yield sliding to 5.624 percent from 5.700 percent last week.

Demand for the 364-day IOUs experienced a sharp rebound. The Treasury fully awarded the ₱7 billion offering as tenders climbed to ₱11.6 billion. At the May 25 auction, the government was forced to cap its one-year award at just ₱4.8 billion after receiving a scant ₱6.8 billion in bids. The average yield for the one-year paper climbed to 6.269 percent from 6.163 percent in the previous sale.

On the secondary market, the Philippine Bloomberg Valuation (PHP BVAL) Reference Rates for the 91-, 182-, and 364-day papers stood at 4.989 percent, 5.404 percent, and 6.107 percent, respectively.

The preference for shorter-duration debt indicates that cash-rich institutions are holding out for higher yields. Investors remain wary of the Philippine peso’s ongoing depreciation against the U.S. dollar, which threatens to push import costs higher and exacerbate domestic price pressures. Geopolitical uncertainty in the Middle East has further fueled market caution over volatile global commodity prices.

The successful sale comes as the Ferdinand Marcos Jr. administration aggressively ramps up its short-term domestic borrowing. The government plans to raise ₱364 billion via Treasury bills in the second quarter, up from the ₱324 billion target in the first three months of the year. Short-term papers are slated to account for 46.4 percent of the state’s total ₱784 billion domestic borrowing window from April to June.

Conversely, economic managers have scaled back long-term capital raising, trimming Treasury bond targets to ₱420 billion from the ₱500 billion initially eyed in the first quarter. The collective second-quarter domestic borrowing framework represents nearly 30 percent of the government’s ₱2.68 trillion total financing requirement for the year.