Despite softer investor demand for government IOUs, the Marcos Jr. administration successfully raised ₱20 billion from the sale of short-dated treasury bills (T-bills) at lower costs, following the Bangko Sentral ng Pilipinas’ (BSP) widely anticipated rate cut last week.

During the latest T-bill auction on Monday, Dec. 15, the Bureau of the Treasury (BTr) raised its planned fundraising amount, with total bids reaching ₱87.5 billion—more than four times the amount of debt papers offered.

This week’s total bids were slightly lower than the ₱88.2 billion in tenders recorded in the previous T-bill auction on Dec. 9.

The government fully awarded the ₱6-billion offering for 91-day T-bills, with total tenders reaching ₱31 billion. The average rate settled at 4.731 percent, 2.8 basis points (bps) lower than the 4.759 percent recorded the previous week.

For 182-day debt papers, the BTr raised the offered amount to ₱7 billion. Bids reached ₱28.9 billion, fetching an average rate of 4.903 percent, slightly higher than last week’s 4.873 percent.

Lastly, the BTr borrowed the offered ₱7 billion through 364-day IOUs. Demand reached ₱27.6 billion, with the average rate inching down by 3.8 bps to 4.924 percent from 4.962 percent in the previous auction.

Ahead of Monday’s auction, PHP Bloomberg Valuation (PHP BVAL) Reference Rates showed that the 91-, 182-, and 364-day T-bills were quoted at 4.868 percent, 4.999 percent, and 5.058 percent, respectively.

Average rates across the board remained higher than the key borrowing cost, which was freshly adjusted by the BSP to 4.5 percent.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the lower borrowing cost comes on the heels of the United States (US) Federal Reserve and the BSP’s widely expected 25-bps cuts in their respective key policy rates.

The BSP last week decided to reduce the key interest rate by a quarter point from 4.75 percent previously, as the central bank expects the local economy to tread a gloomy path amid persistent concerns tied to governance issues.

Economic think tank Moody’s Analytics said a weaker-than-expected third-quarter gross domestic product (GDP) print was “worrying because the slowdown came from within.”

Moody’s noted that household spending—a major driver of output growth—expanded at its weakest pace since early 2021, falling short of expectations that slower inflation and lower borrowing costs would spur spending.

Meanwhile, the government intends to borrow ₱262 billion in T-bills in the last quarter, which will comprise 60 percent of total fourth-quarter debt offerings.

Longer treasury bonds (T-bonds), meanwhile, will account for the remaining 40 percent, with planned borrowings of ₱175 billion. This is 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 T-bills and T-bonds—than from foreign sources. This strategy leverages domestic banks and creditors flush with cash while mitigating exposure to foreign exchange (forex) risks and volatility.