Demand for short-term government securities surged as domestic lenders snapped up debt papers at lower rates, seeking to lock in yields ahead of a possible 25-basis-point cut in key borrowing costs in February.

During the latest Treasury bills (T-bills) auction on Monday, Jan. 26, the Marcos administration raised ₱37.8 billion, surpassing the planned ₱27 billion offer.

Total bids reached ₱156.0 billion—nearly six times the amount of debt papers offered. This week’s total bids were higher than the ₱126.7 billion in tenders from the previous T-bill auction on Jan. 19.

The Bureau of the Treasury (BTr) awarded ₱12.6 billion, exceeding the ₱9-billion offering for 91-day T-bills. Total tenders reached ₱40.1 billion. The average rate was 4.666 percent, down from 4.723 percent last week.

For 182-day debt papers, the BTr raised ₱12.6 billion, also exceeding the offered amount. Bids reached ₱57.6 billion, fetching an average rate of 4.751 percent, 6.6 bps lower than the previous auction’s 4.817 percent.

Lastly, the BTr also exceeded its ₱9-billion borrowing plan through a 364-day IOU. Demand reached ₱58.3 billion, with the average rate inching down by 6.1 bps to 4.827 percent from 4.888 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 4.766 percent, 4.836 percent, and 4.891 percent, respectively.

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

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the strong investor demand for short-dated government securities suggests investors are locking in yields ahead of a possible 25-bps cut by the Bangko Sentral ng Pilipinas (BSP) at its upcoming policy meeting on Feb. 19, 2026.

Ricafort also said yields edged lower following the government’s successful $2.75-billion global bond sale at lower borrowing costs. He added that the strong demand, which stood at $5.95 billion, reflects sustained international investor confidence in Philippine credit quality and eases near-term pressure on the government to raise funds in the domestic market.

For the first quarter of 2026, the government plans to borrow ₱324 billion through T-bills, accounting for 39.3 percent of total first-quarter domestic borrowing.

Meanwhile, Treasury 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 risks and volatility.