The Marcos administration is returning to the international capital markets with a three-tranche offering of United States (US) dollar-denominated global bonds to finance its national budget and refinance existing debt, according to a report from Moody’s Ratings.

In a statement on Tuesday, Jan. 19, Moody’s said it assigned a Baa2 rating to the proposed benchmark-sized issuance, which is expected to include tenors of 5.5 years, 11 years, and 25 years, maturing in 2031, 2036, and 2051.

The multi-tranche structure allows the Bureau of the Treasury to spread its maturity profile across short-, medium-, and long-term obligations. Moody’s said the bonds are senior unsecured obligations that rank equally with the Philippines’ other senior external debt.

The Baa2 rating, which sits two notches above junk, reflects the country’s “high” economic growth potential relative to its peers. However, the rating agency noted that the government continues to grapple with widening gap between its ambitious growth targets and actual economic performance.

Moody’s expects the Philippines to maintain a resilient expansion compared with other emerging markets, supported by robust private consumption and a steady stream of remittances from overseas Filipino workers.

In its Jan. 20 report, Moody’s projected that the country’s economy, as measured by the gross domestic product (GDP), likely grew by approximately five percent in 2025.

The rating agency’s forecast, however, falls short of the Marcos administration’s floor target of 5.5 percent, as domestic investment faces headwinds from ongoing legislative probes into infrastructure spending and global uncertainty regarding US trade policy.

Moody’s also warned that potential shifts in US tariffs could weigh on the country's export sector in the coming years.

While the government’s fiscal metrics remain broadly consistent with other Baa-rated sovereigns, Moody’s indicated that the pace of fiscal consolidation—the government's effort to narrow its budget deficit—will likely be slower than official projections.

The rating agency also raised concerns about debt affordability as the government’s ratio of interest payments to revenue is expected to deteriorate over the next two years before it begins to normalize.

Despite the Bangko Sentral ng Pilipinas initiating a series of interest rate cuts starting in the second half of 2024, the government’s interest burden remains elevated.

Moody’s attributed this to high funding costs and the typical lag in how monetary policy easing filters through to the broader economy.

Nevertheless, the agency maintained a stable outlook, citing the country’s ample foreign-currency reserves and a well-capitalized banking system as critical buffers against volatility in global capital flows.

The government continues to rely on a mix of domestic and international borrowings to cover a budget deficit that remains wider than pre-pandemic levels.