Government borrows ₱35 billion as interest rates fall
By Derco Rosal
Published Feb 24, 2026 05:24 pm
The Marcos administration raised ₱35 billion via a dual-tranche bond auction on Tuesday, Feb. 24, capitalizing on robust investor appetite following the central bank’s decision to further loosen monetary policy.
The Bureau of the Treasury fully awarded ₱25 billion in three-year notes and ₱10 billion in 25-year securities.
Demand for the shorter-dated three-year tranche was particularly strong, with total tenders reaching ₱46.3 billion, nearly twice the amount on offer. The bonds, which are a re-issue of a seven-year series with a remaining life of 2.5 years, fetched an average rate of 5.296 percent.
The new rate is 2.8 basis points lower than the 5.324 percent average recorded during the previous sale of this series on Jan. 27. The rate also settled 5.5 basis points below the 5.351 percent three-year PHP Bloomberg Valuation Service (BVAL) reference rate.
The Treasury auction results reflect the market adjusting to the lower interest-rate environment after the Bangko Sentral ng Pilipinas (BSP) reduced its key borrowing rate to 4.25 percent last week to bolster a softening economy amid manageable inflation.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the decline in shorter-term borrowing costs was a direct response to the central bank's shift toward a more dovish stance.
While the BSP had previously hinted at a pause in its easing cycle, the recent cut signaled a renewed commitment to supporting domestic growth.
In the long-term segment, the Treasury also fully awarded its ₱10 billion offering of 25-year bonds, which attracted ₱20.2 billion in bids. These securities, maturing in January 2050, were awarded at an average rate of 6.577 percent.
Unlike the shorter tenor, this yield represents a 6.7 basis point increase from the 6.510 percent average seen in the October 2025 auction. Despite the climb, the yield remained slightly below the 6.582 percent 25-year BVAL rate.
Ricafort attributed the higher yields on the long end of the curve to investor caution. He noted that market participants are exhibiting some hesitancy in locking in longer-dated tenors as they manage duration risk, preferring the relative safety and liquidity of shorter maturities.
For the first quarter of 2026, the Marcos administration has outlined a domestic borrowing program of ₱824 billion. This includes ₱324 billion in short-dated Treasury bills and ₱500 billion in Treasury bonds.
The government’s strategy continues to prioritize the local debt market to harness ample domestic liquidity and shield the national balance sheet from fluctuations in the foreign exchange market.