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Manila Bulletin devider Business devider Banking & Finance devider Geopolitical jitters, weak peso dampen interest in gov't IOUs

Geopolitical jitters, weak peso dampen interest in gov't IOUs

Published Apr 28, 2026 05:07 pm
Rising uncertainties fueled by the United States-Iran conflict dampened lender demand on Tuesday, April 28, causing the Marcos administration to fall short of its ₱40 billion borrowing target for short-dated government securities.
The Bureau of the Treasury raised only ₱25 billion, leaving a ₱15 billion shortfall from its original offer.
The latest 10-year Treasury bond (T-bond) auction met with muted interest, as the ₱18.1 billion in bids failed to cover the ₱20 billion on offer. This performance was notably weaker than the demand seen during the March 17 sale, which attracted ₱23.3 billion in bids.
These bonds fetched an average rate of 6.857 percent, trending higher than the comparable 10-year PHP Bloomberg Valuation (BVAL) Reference Rate of 6.817 percent.
Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that the tepid demand reflects a strategic pivot toward shorter-term securities.
He attributed this shift to escalating geopolitical tensions in the Middle East, which have driven global oil prices upward and contributed to the continued weakening of the Philippine peso.
These factors are expected to inflate import costs and cost-push inflation, reinforcing market expectations that the Bangko Sentral ng Pilipinas (BSP) may implement further rate hikes beyond the current 4.5 percent level.
In contrast, the government’s sale of four-year debt papers attracted sufficient interest, with bids reaching ₱27.8 billion. These bonds settled at an average rate of 6.741 percent, which was higher than the four-year PHP BVAL rate of 6.426 percent.
The government is ramping up domestic borrowing for the second quarter of 2026, targeting ₱364 billion through short-dated Treasury bills. This is 12.3 percent higher than the ₱324 billion raised in the first quarter.
These short-term instruments will now account for 46.4 percent of the ₱784-billion total domestic borrowing plan for the quarter. Meanwhile, the Treasury has scaled back its long-term borrowing, with bond offerings set at ₱420 billion—a 16 percent decrease from the previous quarter's ₱500 billion. The total domestic borrowing program for the second quarter represents nearly 30 percent of the government’s ₱2.68-trillion annual financing requirement for 2026.

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treasury bonds (T-bonds) Debt rcbc
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