Gov't limits bond sale to curb rising long-term yields
By Derco Rosal
Published Jan 27, 2026 05:36 pm
At A Glance
- Cautious about rising long-term borrowing costs and weaker demand, the Marcos government raised only a portion of its planned ₱50 billion on Tuesday, Jan. 27, 2026, after partially awarding its dual-tranche debt papers and deliberately limiting demand for longer-dated debt.
The national government scaled back its domestic borrowing on Tuesday, Jan. 27, opting to reject a portion of bids for long-term debt as investors demanded higher premiums amid shifting market conditions.
The Bureau of the Treasury raised ₱41.6 billion during an auction of dual-tranche sovereign bonds on Tuesday, Jan. 27, falling short of its ₱50 billion target.
Demand for short-term debt remained robust, with the Treasury fully awarding ₱30 billion in three-year Treasury bonds. Bids for this tranche reached ₱102.7 billion, an oversubscription of more than three times the offered amount and nearly doubling the ₱52.1 billion in tenders seen during a similar auction on Jan. 6.
With a remaining life of two years and six months, the three-year bonds were awarded at an average rate of 5.324 percent. This was a decline of 14.3 basis points from the 5.467 percent recorded three weeks ago and sits 12.8 basis points below the comparable secondary market rate of 5.452 percent, according to the PHP Bloomberg Valuation Service Reference Rate.
The downward pressure on short-term yields is largely driven by the anticipation of further monetary easing. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the market is positioning for the Bangko Sentral ng Pilipinas to cut interest rates in February, supported by a cooling inflation environment and a slowdown in economic growth.
In contrast, the Treasury took a defensive stance toward long-term debt. It awarded only ₱11.6 billion of the planned ₱20 billion in 20-year bonds, even as total bids reached ₱25 billion.
These bonds, which have 18 years and three months remaining until maturity, fetched an average rate of 6.572 percent. That is 14.8 basis points higher than the 6.424 percent seen in November and 7.8 basis points above the 20-year BVAL rate.
The partial award followed a noticeable dip in appetite for duration; the ₱25 billion in total bids for the 20-year tranche was significantly lower than the ₱36.86 billion tendered in the previous November auction.
The government’s borrowing program for the first quarter of 2026 totals ₱824 billion, with ₱500 billion earmarked for Treasury bonds and ₱324 billion for short-dated Treasury bills.