The Marcos administration has successfully borrowed ₱30 billion from the sale of long-term debt securities but with higher borrowing costs despite higher demand from domestic investors.

During the sale of seven-year treasury bonds (T-bonds) on Tuesday, the Bureau of the Treasury (BTr) fully awarded its ₱30-billion offering, with total bids reaching ₱64 billion, more than double the amount offered.

Demand was stronger than the ₱57.7-billion tenders during the previous seven-year bond auction on June 10.

With a remaining maturity of seven years and two months, the bonds were awarded at an average rate of 6.128 percent. This was higher by 12.5 basis points (bps) than the 6.075-percent rate for comparable corporate bonds in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rate.

It was also slightly higher than the 6.124 percent recorded in the same auction almost a month ago.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), Tuesday’s yield marked the highest interest costs in nearly a month, reflecting concerns over rising inflation and global risks.

He said risks include the recent Israel-Iran conflict, higher oil prices, and a stronger United States (US) dollar, as well as elevated US Treasury yields amid fiscal and trade policy uncertainty.

Following an 80:20 borrowing mix, the Philippines sources more debt 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.