The Marcos administration has raised ₱25 billion from the sale of long-term debt securities, benefiting from lower borrowing costs and stronger demand from domestic investors, following the United States’ (US) move to impose higher tariffs on some trade partners, including the Philippines.

During the sale of seven-year treasury bonds (T-bonds) on Tuesday, July 15, the Bureau of the Treasury (BTr) fully awarded its ₱25-billion offering, with total bids reaching ₱63.5 billion, nearly three times the amount offered.

Demand was stronger than the ₱55.5-billion tenders during the previous 10-year bond auction on June 17.

With a remaining maturity of nine years and nine months, the bonds were awarded at an average rate of 6.285 percent. This was 3.2 basis points (bps) higher than the 6.253-percent rate for comparable corporate bonds in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rate.

However, it was 14.3 bps lower than the 6.428 percent recorded in the same auction almost a month ago.

According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), lower interest rates could still be attributed to the United States’ (US) imposition of higher tariffs that could drag the global economy. This is seen to spill over to the Philippines, supporting further accommodative monetary policy measures.

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.