The Marcos administration scaled back its planned borrowing on Tuesday, April 7, as domestic investors showed cooling appetite for longer-dated debt, signaling caution amid shifting global risks.

The Bureau of the Treasury raised ₱40 billion through a dual-tranche bond auction, falling short of its ₱41.4 billion target. While the government found steady demand for its shorter-dated notes, lenders displayed significant hesitation toward longer-term IOUs, forcing the Treasury to reject higher bids to keep borrowing costs within a manageable range.

Investors offered ₱25.5 billion for the eight-year Treasury bonds, barely exceeding the ₱20 billion on offer. In response to the thin demand, the Treasury awarded only ₱18.6 billion.

The bonds fetched an average rate of 6.747 percent, surpassing the comparable eight-year PHP Bloomberg Valuation Reference Rate of 6.739 percent. However, the yield remained below the series-specific benchmark of 6.804 percent.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said market participants are increasingly hesitant to lock into longer tenors as they seek to manage duration risk.

The wariness is fueled by heightening geopolitical tensions, particularly in the Middle East, which have historically driven volatility in emerging market debt.

In contrast, the Treasury saw robust interest for its three-year bonds, which were fully awarded. Tenders for the shorter-dated notes reached ₱40.5 billion, nearly double the ₱21.4 billion offered. The average rate for the three-year tranche settled at 6.298 percent.

While this was below the BVAL rate of 6.337 percent, it represented a significant jump from the 5.296 percent yield recorded during a similar auction just over a month ago.

The Marcos administration is recalibrating its financing strategy as it moves into the second quarter of 2026. The government plans to ramp up its reliance on short-dated Treasury bills, seeking to raise ₱364 billion. This marks a 12.3 percent increase from the ₱324 billion targeted in the first quarter. Under the new program, T-bills will account for 46.4 percent of total domestic offerings.

Simultaneously, the Treasury is dialing back its long-term debt issuance. Planned borrowings for T-bonds have been cut to ₱420 billion for the second quarter, a 16 percent drop from the ₱500 billion sought in the previous three-month period.

The total domestic borrowing program for the second quarter represents roughly 29.3 percent of the government’s ₱2.68 trillion annual funding goal for 2026.