Demand for longer-dated government debt remained robust despite the recent hawkish shift from the central bank, allowing the Marcos administration to raise ₱30 billion at rates that beat secondary market benchmarks.

On Tuesday, Jan. 13, the Bureau of the Treasury fully awarded its offer of seven-year IOUs as total tenders reached ₱95.8 billion, more than triple the initial volume on the auction block. Appetite for the debt exceeded the ₱71.7 billion in bids recorded during the previous sale of similar tenors in November 2025 as investors remain eager to lock in yields even as monetary policy signals turn more cautious.

The bonds, which have a remaining life of five years and four days, were issued at an average rate of 5.710 percent. That level is slightly lower than the 5.730 percent yield for comparable debt in the secondary market, based on the PHP Bloomberg Valuation Service Reference Rate.

While the rate came in below market benchmarks, it was 8.1 basis points higher than the 5.649 percent average seen during the November auction. The yield also persists well above the Bangko Sentral ng Pilipinas’s (BSP) current key policy rate of 4.5 percent.

Rizal Commercial Banking Corp. Chief Economist Michael Ricafort noted that the government successfully tapped local lenders for the full ₱30 billion despite the BSP adopting a relatively hawkish stance in its recent policy deliberations.

While BSP Governor Eli M. Remolona Jr. previously suggested that a further reduction in the benchmark rate could occur in February should economic growth falter, market participants increasingly view such a move as unlikely. The central bank has already delivered a cumulative 200 basis points of easing since interest rates peaked at 6.5 percent in 2024.

For the first quarter of 2026, the national government expects to lean heavily on the domestic market to fund its spending requirements.

The Treasury plans to raise ₱324 billion through short-term Treasury bills, representing roughly 39.3 percent of the total first-quarter domestic borrowing plan. Longer-term Treasury bonds will account for the remaining 60.7 percent of the program, with an issuance target of ₱500 billion.

The Marcos administration continues to prioritize local financing over external debt to capitalize on high liquidity within the domestic banking system.

By focusing on peso-denominated T-bills and T-bonds, the government aims to minimize its exposure to global foreign exchange volatility and reduce the long-term impact of currency fluctuations on its debt-to-gross domestic product (GDP) ratio.