Despite lower demand from local investors, the Marcos administration has successfully borrowed its planned ₱30 billion through the sale of long-term debt securities at higher interest rates, amid reduced chances of US Federal Reserve rate cuts.

At an auction on Tuesday, June 10, the Bureau of the Treasury (BTr) awarded the offered amount through the sale of five-year Treasury bonds (T-bonds). Bids totaled ₱57.7 billion, nearly twice the amount offered.

However, demand was weaker than the ₱71.7 billion in tenders from the same auction on May 6.

With a remaining life of seven years and three months, the bonds were awarded at an average rate of 6.124 percent. This was 4.3 basis points (bps) higher than the previous auction’s 6.081 percent.

This was 5.2 bps higher than the 6.072-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 higher interest costs followed recent record highs in national government yields and increased US Treasury yields.

They inched higher amid reduced chances of US Federal Reserve rate cuts, following recent progress in US-China trade talks, stronger-than-expected US employment data, and global oil prices climbing to two-month highs.

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.