Philippine Treasury raises P52.8 billion as short-term yields extend climb

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Philippine Treasury raises P52.8B

Highlights

Philippine Bureau of the Treasury raised P52.8 billion via short-term bills as yields climbed for the 11th consecutive week amid inflation concerns.
Average yields rose to 5.607% (35-day), 6.438% (91-day), 6.646% (182-day), and 6.756% (364-day), with partial awards due to insufficient competitive bids.
BusinessWorld poll projects October inflation at 7.6%, likely marking eight consecutive months above Bangko Sentral ng Pilipinas’ 3-4% target ceiling.

Auction results reflect inflation and rate concerns

As reported by BusinessWorld Online, the Bureau of the Treasury made a partial award of its short-term debt offer on Tuesday, with yields rising across all tenors as the market expects Philippine inflation to have reached a fresh peak in October.

The Treasury borrowed P10 billion as planned through 35-day cash management bills after receiving P11.3 billion in bids. The average rate on the one-month paper rose to 5.607% from 5.589% a week earlier, with accepted bids ranging from 5.5% to 5.85%.

For Treasury bills, the government raised P42.8 billion, below the P45 billion target, even as tenders reached P84.03 billion. The 91-day bill was fully awarded at P20 billion, with an average yield of 6.438%, up from 6.264% last week. The 182-day bill was also fully awarded at P15 billion and fetched an average rate of 6.646%, higher than the previous 6.43%.

The Treasury raised only P7.8 billion from the 364-day securities, short of the P10 billion plan, although demand reached P10.922 billion. The average yield on the one-year paper climbed to 6.756% from 6.58%, while the Treasury said the shortfall was due to insufficient competitive bids, which totaled P3.8 billion.

Market pricing shifts ahead of inflation data

T-bill rates climbed for an 11th straight week as investors continue to factor in faster inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said. He also pointed to stagflation risks tied to a possible Super El Niño drought lasting into early 2027, which could add to inflationary pressure.

Mr. Ricafort said the market is still pricing in the Bangko Sentral ng Pilipinas' 50-basis-point rate hike last month and the central bank's hawkish stance. A trader added that the Treasury has become more willing to accept higher borrowing costs as yields move upward, while demand remained strongest for the 91-day tenor.

The Philippine Statistics Authority is set to release October inflation data on Thursday, Nov. 5. A BusinessWorld poll of 22 analysts and economists shows a median estimate of 7.6%, above the 7.2% peaks recorded in April and September and within the central bank's 7.1% to 8.1% forecast range for the month.

If realized, October would mark the eighth straight month that headline inflation exceeds the central bank's 3% target and 4% ceiling. The Bureau of the Treasury is targeting P283 billion in domestic borrowing this month, including P168 billion from T-bills and P115 billion from Treasury bonds, as the government funds a budget deficit capped at P1.659 trillion, or 5.4% of gross domestic product, this year.

Our earlier coverage of planned Philippine sovereign bond reforms outlined the shift to a new pricing convention for peso-denominated government bonds starting Jan. 4, 2027, alongside the country’s expected inclusion in J.P. Morgan’s Government Bond Index-Emerging Markets later that month. We noted these steps could improve liquidity and widen the investor base, but that lower borrowing costs still depend on global rates and confidence in fiscal credibility. The piece also emphasized that deeper capital-market development and productive investment require broader structural reforms beyond market modernization alone.

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