Domestic lenders are snapping up government securities ​i​n a move to ​l​ock in still relatively high rates before the Bangko Sentral ng Pilipinas (BSP) delivers another reduction in benchmark rates.

This was evident in the higher ₱37.8 billion borrowed through the sale of short-dated treasury bills (T-bills) of the Marcos Jr. administration during the second week of January, exceeding the programmed level of ₱27 billion. These were also borrowed at low costs.

During the latest T-bill auction on Monday, Jan. 12, the Bureau of the Treasury (BTr) exceeded its planned fundraising amount, with total bids reaching ₱113.1 billion—more than four times the amount of debt paper offered.

This week’s total bids were higher than the ₱108.1 billion in tenders from the previous T-bill auction on Jan. 5.

The government awarded ₱12.6 billion, exceeding the ₱9-billion offering for 91-day T-bills. Total tenders reached ₱35.4 billion. The average rate was 4.731 percent, 2.4 basis points (bps) lower than the 4.755 percent recorded last week.

For 182-day debt paper, the BTr raised ₱12.6 billion, also exceeding the offered amount. Bids reached ₱43.6 billion, fetching an average rate of 4.850 percent, 4.5 bps lower than the last auction’s 4.895 percent.

Lastly, the BTr also exceeded its ₱9-billion borrowing plan through 364-day IOUs. Demand reached ₱34 billion, with the average rate inching down by 2.1 bps to 4.916 percent from 4.937 percent in the previous auction.

Prior to Monday’s auction, PHP Bloomberg Valuation (PHP BVAL) Reference Rates showed that the 91-, 182-, and 364-day T-bills were quoted at 4.801 percent, 4.91 percent, and 4.975 percent, respectively.

Average rates across the board were lower than secondary market rates but remained higher than the key borrowing cost of 4.5 percent.

Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said the lower borrowing costs across the board come amid signals that the BSP could cut rates in February, even as it indicated the easing cycle is nearing its end.

Demand for T-bills remained generally strong, with total bids showing investors’ strategy to lock in yields ahead of a potential rate cut.

On the global front, meanwhile, Ricafort said any aggressive rate cuts by the United States Federal Reserve (US Fed) could influence local policy, as the BSP may adjust rates to maintain healthy interest rate differentials and support the peso.

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, treasury bonds (T-bonds) will make up the bigger 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.