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Manila Bulletin devider Business devider Banking & Finance devider Gov't borrows ₱30 billion as yields jump on cooling demand

Gov't borrows ₱30 billion as yields jump on cooling demand

Published Jan 20, 2026 03:59 pm

At A Glance

  • Even as investor demand for longer-dated government securities weakened, the Marcos administration managed to borrow ₱30 billion, but at higher costs.
The national government raised ₱30 billion from the sale of seven-year Treasury bonds even as borrowing costs climbed and investor appetite for longer-dated debt showed signs of cooling.
The Bureau of the Treasury fully awarded the planned amount during Tuesday’s auction, despite a noticeable dip in demand compared to recent offerings. Total bids reached ₱41.5 billion, making the auction 1.3 times oversubscribed. That represents a sharp decline from the ₱95.8 billion in tenders received during a similar auction on Jan. 13.
The seven-year notes, which have a remaining life of seven years and two months, were awarded at an average rate of 5.934 percent. This yield is 2.6 basis points higher than the 5.908 percent quoted for comparable debt in the secondary market, based on the PHP Bloomberg Valuation Service Reference Rate.
More significantly, the rate jumped 22.4 basis points from the 5.710 percent fetched during last week’s auction. The result also remains well above the Bangko Sentral ng Pilipinas’ current key policy rate of 4.5 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the hesitation among domestic lenders reflects concerns over the strength of the United States (US) dollar. A sustained rally in the greenback risks driving up the cost of imported goods, potentially reigniting inflationary pressures that would make long-term, fixed-income assets less attractive.
For the first quarter of 2026, the government aims to raise ₱824 billion from the domestic market. Short-term Treasury bills are expected to account for ₱324 billion, or roughly 39.3 percent of the total, while the remaining 60.7 percent, or ₱500 billion, is slated to come from fixed-rate Treasury bonds.
The government continues to favor domestic capital markets over foreign borrowing to fund its budget deficit. By leaning on local banks and institutional investors currently flush with liquidity, the Treasury aims to mitigate the risks associated with global interest rate fluctuations and foreign exchange volatility.
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