The Marcos administration has borrowed its planned ₱30 billion from local lenders through the sale of long-term debt securities at lower interest rates, due to strong demand and expectations of further inflation slowdown.

The Bureau of the Treasury (BTr) awarded the offered amount through the sale of five-year Treasury bonds (T-bonds). Bids totaled ₱59.9 billion, nearly twice the amount offered.

Demand was slightly higher than the ₱55.2 billion in tenders from the same auction on April 29.

The sale saw a slight decline in interest rates but a relatively stronger interest from domestic creditors.

With a remaining maturity of five years and one month, the bonds were awarded at an average rate of 5.887 percent. This was 5.6 basis points (bp) lower than the previous auction’s 5.943 percent.

This was 1.1 bps higher than the 5.898-percent rate for comparable corporate bonds in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rate.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said that the softer yield, relative to the reference and previous rates, comes ahead of the June 5 inflation report, which is expected to show continued easing.

The decline also follows a recent pullback in US Treasury yields, with the 10-year benchmark falling to a two-week low of 4.43 percent.

Other positive factors include the central bank’s recent signal of two quarter-point rate cuts for the remainder of 2025. The outlook is supported by easing inflation and a stable economic backdrop.

He noted that the peso’s sustained strength against the US dollar, alongside over three-year low global crude oil prices, and easing import costs and inflation pressures, could prompt further monetary easing in the months ahead.

The Philippines borrows more locally, through treasury bills and bonds, than from foreign sources. This borrowing strategy leverages domestic banks and creditors who are flush with cash, while mitigating exposure to foreign exchange (forex) risks and volatility.

The 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.