Japan-based debt watcher R&I’s fresh affirmation of the Philippines’ high investment-grade ‘A-’ credit rating has allowed the Marcos administration to raise a cumulative ₱35 billion through bond sales at lower borrowing costs.

During the auction of three-year and 25-year Treasury bonds (T-bonds) on Wednesday, Aug. 27, the Bureau of the Treasury (BTr) fully awarded the total ₱35 billion offering, with demand surging for the shorter-dated securities.

In particular, the three-year T-bonds drew total bids of ₱93 billion—more than nine times the ₱10 billion on offer, which was fully awarded.

With a remaining maturity of two years and seven months, the bonds were awarded at an average rate of 5.634 percent—slightly lower than the comparable three-year PHP Bloomberg Valuation (BVAL) yield of 5.724 percent as of Aug. 26, and below the 5.817 percent recorded in the previous auction on July 22.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the latest yield marked the lowest level in nearly 10 months, ahead of the widely expected 25-basis-point (bp) policy rate cut by the Bangko Sentral ng Pilipinas (BSP) on Aug. 28.

He noted there was “strong investor appetite for not-so-long tenors, to lock in yields before they go down further.”

Ricafort added that the market has priced in subdued inflation, weak global oil prices, a stronger peso, and the possibility of a U.S. Federal Reserve rate cut next month.

Meanwhile, the 25-year T-bonds attracted total bids of ₱35.2 billion, or 1.4 times the ₱25 billion on offer, which was also fully awarded. This was higher than the ₱22.61 billion in total bids during the previous auction two months ago.

With a remaining maturity of 24 years and five months, the long-term bonds were awarded at an average rate of 6.374 percent, slightly higher than the comparable PHP BVAL yield of 6.347 percent as of Aug. 26.

However, this was lower than the 6.649 percent posted in the June 25 auction. Ricafort said the yield remains among the highest levels in over a year despite being the lowest in more than three months.

He also observed “relatively weak investor appetite for long-term tenors.”

Overall, Ricafort said average yields for both tenors were lower than in previous auctions, following R&I’s affirmation of the Philippines’ A- credit rating with a stable outlook—three notches above minimum investment grade—signaling continued investor confidence in the country’s economic and credit fundamentals, and helping reduce the national government’s borrowing costs.