The Marcos Jr. government successfully borrowed its planned amount of ₱50 billion at higher costs through the sale of dual-tranche government bonds.

During the sale of the three-year treasury bonds (T-bonds) on Tuesday, Jan. 6, the Bureau of the Treasury (BTr) fully awarded its ₱20-billion offering. Total bids reached ₱52.1 billion, more than twice the amount offered.

Demand was weaker than the ₱59.8 billion tendered during the previous three-year bond auction in December 2025.

With a remaining maturity of two years and seven months, the bonds were awarded at an average rate of 5.467 percent.

This was 4.2 basis points (bps) lower than the 5.509 percent rate for comparable corporate bonds in the secondary market, based on PHP Bloomberg Valuation (BVAL) Service Reference Rate.

It was 21.1 bps higher than the 5.256 percent recorded in the same auction in December 2025. However, it remained above the central bank’s key policy rate of 4.5 percent.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the yield for the three-year bond was higher following the central bank’s hawkish signals during its latest policy easing last month.

Meanwhile, during the sale of the 10-year T-bonds, the BTr fully awarded its ₱30-billion offering. Total bids reached ₱72.7 billion, more than twice the amount offered. Demand was higher than the ₱65.8 billion tendered during the previous 10-year bond auction in December 2025.

With a remaining maturity of nine years and three months, the bonds were awarded at an average rate of 5.985 percent.

This was 3.3 bps lower than the 6.018 percent rate for comparable corporate bonds in the secondary market, based on PHP BVAL Service Reference Rate. It was 10.9 bps higher than the 5.876 percent recorded in the same auction last month.

Despite higher demand, Ricafort said market caution on longer-term bonds still persists amid near-record United States (US) dollar-peso levels, which could raise import costs and inflation.

For the first quarter of 2026, the government plans to borrow ₱324 billion through T-bills, which would account for 39.3 percent of total first-quarter domestic borrowing. Meanwhile, T-bonds will make up the remaining 60.7 percent of the first-quarter program, with planned borrowings of ₱500 billion.

The Philippines borrows more locally, through T-bills and T-bonds, than from foreign sources. This strategy leverages domestic banks and creditors that are flush with cash while mitigating exposure to foreign exchange (forex) risks and volatility.