The national government has raised more than its offered amount of ₱25 billion through short-term debt papers, as demand from local creditors soared despite lower interest rates driven by expectations of further rate cuts in the coming months.

At Monday’s auction on May 26, the Bureau of the Treasury (BTr) awarded its ₱28.6 billion Treasury bill (T-bill) offer. Total bids reached ₱84.3 billion—more than three times the amount offered.

This week’s total bids were higher than the ₱78.4 billion in tenders from the previous T-bill auction on May 19.

The government fully awarded the ₱8-billion offering for 91-day T-bills. Total tenders reached ₱25.6 billion. The average rate was 5.468 percent, 4.7 basis points (bps) lower than the previous week’s 5.515 percent rate. 

For 182-day debt papers, the BTr raised ₱8 billion, fully awarding the offered amount. Bids reached ₱30.3 billion. It fetched an average rate of 5.551 percent, also lower by 6.1 bps than last week’s 5.612 percent. 

Notably, the BTr borrowed ₱12.6 billion, more than the planned ₱9 billion through 364-day IOUs. Demand reached ₱28.4 billion. The average rate also dropped slightly by 0.8 percent to 5.694 percent from 5.702 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 5.455 percent, 5.610 percent, and 5.740 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.

Only the one-year debt securities posted an increase from last week’s rate, while the benchmark rates for the three-month and six-month decreased.

The average rate for the three-month T-bills clocked in lower than the key borrowing costs of 5.5 percent. Meanwhile, the longer-dated IOUs stood higher than the benchmark.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the decline in interest rates this week, which came alongside the drop in short-term benchmark PHP BVAL rates, followed recent signals from Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona about the possibility of two quarter-point cuts in 2025—fewer than the three cuts previously hinted.

Therefore, the lower yields were driven by higher demand, as some investors are locking in “still relatively high rates” before they decline in the coming months.

Ricafort added that the outlook for lower inflation, a potential reserve requirement ratio (RRR) cut in 2026, a stronger peso hitting a nearly two-year high against the US dollar allow for further monetary policy easing.

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.