Bureau of the Treasury
The Marcos administration was able to raise its target amount of longer-dated local debts during its first sale of Treasury bonds (T-bonds) for this year, after creditors sought lower rates following the release of the latest inflation data.
Auction results on Tuesday showed the Bureau of the Treasury (BTr) borrowed its planned amount of P30 billion via re-issued T-bonds, which had a remaining life of five years and six months.
The offering was met with high demand after total tenders reached P71.2 billion, 2.4 times larger than the original amount that the BTr had hoped to raise.
READ: T-bill rates fell during first 2025 debt offering
That, in turn, helped bring down borrowing costs for the government. The five-year debt papers fetched an average rate of 6.060 percent, cheaper than the 6.078 percent quoted for the comparable tenor in the secondary market.
But the yield was higher than the 5.954 percent recorded during the last auction of five-year T-bonds on Nov. 26, 2024.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said yields were also lower following the release of the December inflation data, which showed a mild uptick of 2.9 percent.
The benign inflation print, in turn, boosted the case for another rate cut by the central bank this year.
For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad to plug a projected budget hole amounting to P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product.
By sources of financing, the government will borrow P507.41 billion from foreign investors in 2025.
The remaining P2.04 trillion is targeted to be raised domestically, of which P60 billion will be via Treasury bills and P1.98 trillion via T-bonds. All of this, in turn, is expected to push the government’s outstanding debt to P17.35 trillion by the end of 2025.
According to Finance Secretary Recto, the government wants to eventually lessen the share of foreign borrowings to 10 percent—from the current level of around 25 percent—to minimize foreign exchange risks that can bloat the peso-value of external debts.
But the finance chief said this fiscal goal would not be achieved within the term of President Ferdinand Marcos Jr., adding that the government will be diversifying its sources of external financing to lock-in cheaper rates as much as possible.