The Marcos administration has successfully borrowed ₱25 billion from domestic lenders through short-term debt papers, as creditors moved to lock in relatively higher interest rates ahead of a possible reduction in key borrowing costs by the Bangko Sentral ng Pilipinas (BSP) at its policy meeting next month.

At Monday’s auction on May 19, the Bureau of the Treasury (BTr) fully awarded its ₱25 billion Treasury bill (T-bill) offer. Total bids reached ₱78.4 billion—more than three times the amount offered.

This week’s total bids were higher than the ₱70.3 billion in tenders from the previous T-bill auction on May 13.

The government fully awarded the ₱8-billion offering for 91-day T-bills. Total tenders reached ₱24.1 billion. The average rate was 5.515 percent, 3.1 basis points (bps) lower than the previous week’s 5.546-percent rate.

For 182-day debt papers, the BTr raised ₱8 billion, fully awarding the offered amount. Bids reached ₱34.3 billion. It fetched an average rate of 5.612 percent, also lower by 3.8 bps than last week’s 5.65 percent.

Finally, the BTr borrowed the planned ₱9 billion through 364-day IOUs. Demand reached ₱20 billion. The average rate climbed by 4.7 bps to 5.702 percent from 5.655 percent in the previous auction.

Prior to Monday’s auction, PHP Bloomberg Valuation (PHP BVAL) Reference Rates showed that the 91-, 182-, and 364-day T-bills were quoted at 5.513 percent, 5.626 percent, and 5.7 percent, respectively.

Notably, the three-month and one-year government securities were higher than this official benchmark. The six-month debt paper, meanwhile, was lower than the benchmark rate.

All T-bill yields are higher than the central bank’s key policy rate of 5.5 percent.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said that, “The increased demand could indicate locking in relatively higher yields before BSP rates go down further, amid [a] possible 25-bp rate cut as early as June 19.”

This expectation also stems from recent signals by BSP Governor Eli M. Remolona Jr. on “possible additional three quarter-point rate cuts for the rest of 2025 amid benign inflation that gives greater leeway to cut rates.”

The Philippines borrows more locally—through treasury bills and bonds—than from foreign sources. This borrowing strategy takes advantage of domestic banks and creditors who are awash in cash, while veering away from foreign exchange (forex) risks and volatility.

The national government’s outstanding debt was equivalent to 62 percent of the country’s gross domestic product (GDP) in the first quarter—its highest level in two years. It climbed from 60.7 percent at the end of 2024.

Specifically, domestic debt stood at 42.3 percent of GDP, while foreign debt had a GDP ratio of 19.7 percent.

This came as the Marcos administration hiked its borrowings to advance its spending program, pushing the debt ratio further above the global benchmark.