The government raised ₱60 billion, surpassing its target at a debt auction, as the Marcos administration sold a combination of two government bonds and a short-dated security amid robust local investor demand.

During the sale of the five-year Treasury bonds (T-bonds) on Tuesday, Nov. 5, the Bureau of the Treasury (BTr) fully awarded its ₱20-billion offering. Total bids reached ₱71.7 billion, more than three times the amount offered.

Demand was weaker than the ₱79.7 billion tendered during the previous five-year bond auction on Sept. 9.

With a remaining maturity of four years and eight months, the bonds were awarded at an average rate of 5.649 percent.

This was 5.5 basis points (bps) lower than the 5.705 percent rate for comparable corporate bonds in the secondary market, based on the PHP Bloomberg Valuation (BVAL) Service Reference Rate.

It was also 12.3 bps lower than the 5.772 percent recorded in the same auction two months ago. However, it remained above the central bank’s key policy rate of 4.75 percent.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said this could be attributed to the benefits “safer haven” T-bonds had from the recent drop in the local stock market, which hit its lowest in three years since October 2022.

Meanwhile, during the sale of the 10-year T-bonds, the BTr fully awarded its ₱15-billion offering. Total bids reached ₱66.4 billion, more than four times the amount offered.

Demand was higher than the ₱43.5 billion tendered during the previous three-year bond auction on Oct. 7.

With a remaining maturity of nine years and five months, the bonds were awarded at an average rate of 5.894 percent.

This was five bps lower than the 5.944 percent rate for comparable corporate bonds in the secondary market, based on the PHP BVAL Service Reference Rate. It was 14.9 bps higher than the 6.043 percent recorded in the same auction last month.

₱25 billion in T-bills

Last Monday, the BTr raised P25 billion in T-bills, exceeding its ₱22-billion fundraising target.

During the latest T-bill auction on Nov. 3, the total bids for T-bills reached ₱97.2 billion—more than four times the amount of debt paper offered.

This week’s total bids were higher than the ₱85.5 billion in tenders from the previous T-bill auction on Oct. 27.

Demand for the three-month and six-month government debt securities picked up, while it dropped for the one-year IOUs. Borrowing costs for longer-dated debt papers were lower, while they inched up for the three-month T-bills.

For the fourth quarter of the year, the government intends to borrow ₱262 billion in Treasury bills (T-bills), which will comprise 60 percent of the total fourth-quarter debt offerings.

Meanwhile, T-bonds will account for the remaining 40 percent, with planned borrowings of ₱175 billion. This is ₱190 billion, or 52.1 percent, lower than the third quarter’s ₱365 billion, continuing the decline seen in the previous quarter.

Planned domestic borrowings for the last quarter represent 17.1 percent of the government’s total planned borrowing of ₱2.55 trillion for 2025.

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.