The government has partially raised P12.5 billion in Treasury bills out of its P15 billion offer on Monday as rates increased following faster inflation in September and terrorist attacks against Israel over the weekend.

The Bureau of the Treasury, or BTr, offered investors 91-day, 182-day, and 364-day debt papers with a value of P5 billion each.

BTr reported total bids for the debt papers reached P22.6 billion or 1.5 times more than the government's program.

The government awarded P4.788 billion for the three-month debt papers with an average rate of 5.806 percent, up from 5.698 percent in the previous auction last week.

Also accepted by the government was P4.410 billion for the six-month debt papers as they fetched a higher average rate of 6.115 percent from 6.023 percent recorded in the previous auction.

The BTr awarded another P3.320 billion for the one-year debt papers which posted an average rate of 6.305 percent, up from 6.215 percent in the last week's auction.

Investors' expectations

Michael Ricafort, chief economist of Rizal Commercial Banking Corporation, said the higher rates of the Treasury bills reflected expectations among investors of inflation risks from possible higher oil prices due to the war between Israel and Hamas, a Palestinian terrorist group.

"The Treasury bill average auction yields were again higher for the third straight week after the Israel-Hamas war over the weekend partly led to some hedging or risk aversion among investors," Ricafort said.

"There is a potential geopolitical risk in the Middle East that could include Iran, which is among the world's largest oil producers and finances Hamas," the economist continued.

Electricity and fuel prices were slightly lower last month, with 2.4 percent inflation from 2.5 percent in August.

                                                                                                     Global oil price increased

Yesterday's data from Bloomberg showed global oil prices increased again to $87 per barrel after falling from $95 to $82 per barrel.

Ricafort said prospects of a higher policy rate from the Bangko Sentral ng Pilipinas this year also encouraged higher rates of Treasury bills or T-bills.

The economist said the Philippine central bank might mirror a rate increase by the US Federal Reserve to attract investors and keep a healthy foreign exchange rate, apart from slowing back inflation.

"There were higher T-bill auction yields after the bigger weekly increase in US government bond yields. These came after stronger-than-expected US jobs data that could support the higher-for-longer rate narrative," Ricafort said.