Treasury Bonds Auction Raises ₱30 Billion for Philippine Government Amid Higher Rates
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MAY 07,2025
MANILA, Philippines –
In a strategic move to manage the national budget deficit, the Philippine government successfully raised ₱30 billion through the re-issuance of seven-year Treasury bonds (T-bonds) during its latest auction held on Tuesday. Despite tighter domestic liquidity following last month’s jumbo bond sale, investor demand remained strong—though at a higher borrowing cost.
The Bureau of the Treasury (BTr) announced that the offering was oversubscribed, receiving total bids worth ₱71.7 billion—more than double the initial target. However, the strong appetite from local creditors came with a catch: they demanded higher yields.
The average rate for the reissued T-bonds stood at 6.081%, notably higher than the 5.986% rate recorded during the last auction of similar seven-year bonds. It also edged out the 6.061% yield quoted in the secondary market as of May 5.
Gov’t raises P30B from 10-year treasury bonds.
Treasury Bonds-Why the Higher Interest Rate?
According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), the increase in rates can be attributed to the tightening of peso liquidity in the financial system after the government’s recent ₱300-billion issuance of 10-year local Treasury notes.
“This previous large-scale borrowing temporarily absorbed excess funds, prompting higher yields in subsequent auctions,” Ricafort explained.
Borrowing Strategy to Fund the Budget Deficit
The Marcos administration has set a 2025 borrowing target of ₱2.55 trillion to bridge a projected ₱1.54-trillion budget deficit, which is around 5.3% of the country’s GDP.
Here’s a breakdown of the government’s borrowing plan:
- ₱507.41 billion from foreign investors
- ₱2.04 trillion from domestic sources, including:
- ₱60 billion via short-term Treasury bills
- ₱1.98 trillion through longer-dated T-bonds
This approach supports ongoing fiscal programs while reinforcing the country’s debt management and economic recovery efforts. NOWTREND
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