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Manila Bulletin devider Business devider Banking & Finance devider Gov't borrows below-target ₱28 billion through treasury bonds amid elevated interest costs

Gov't borrows below-target ₱28 billion through treasury bonds amid elevated interest costs

Published Jun 17, 2025 02:33 pm

At A Glance

  • The Marcos administration has borrowed below its planned ₱30 billion through the sale of long-term debt securities as it rejected bids with higher interest rates amid continued tensions between Israel and Iran.
The Marcos administration has borrowed below its planned ₱30 billion through the sale of long-term debt securities, as the Bureau of the Treasury (BTr) rejected bids seeking higher interest rates amid continued tensions between Israel and Iran.
At the auction on Tuesday, June 17, the BTr awarded only ₱27.6 billion in reissued 10-year treasury bonds (T-bonds).
Tenders totaled ₱55.4 billion, nearly twice the amount offered.
But this week’s demand was weaker than the ₱57.7 billion tendered by government securities eligible dealers (GSEDs) during last week’s auction for 7.25-year T-bonds.
With a remaining term of nine years and 10 months before maturity, the bond’s yield was capped at an annual rate of 6.428 percent. This was significantly higher than the previous auction’s 6.124 percent.
It was also 4.8-basis-point (bp) higher than the 6.38-percent rate for comparable corporate bonds in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rate.
The total outstanding amount for this T-bond series stood at ₱367.6 billion, the BTr said in a statement.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said bond interest rates jumped to an 11-month high due to geopolitical tensions and global economic concerns.
He attributed the uptick to the ongoing Israel-Iran conflict, which pushed up global oil prices and the United States (US) dollar-Philippine peso exchange rate, raising inflation risks.
The Philippines borrows more locally, through the issuance of 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 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.

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Bureau of the Treasury (BTr)
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