T-bond rates rise amid German fallout

Results of the Treasury Bonds auction on Tuesday, March 18, 2025.

MANILA, Philippines –  The Marcos administration was still able to raise its target amount of longer-dated local debts during Tuesday’s sale of Treasury bonds (T-bonds) despite higher yields sought by creditors as the selloff in German bonds reverberated around the world.

Auction results showed that the Bureau of the Treasury (BTr) was able to meet its goal of borrowing P30 billion via re-issued T-bonds, which have a remaining life of eight years and 10 months.

The T-bonds attracted total tenders amounting to P58.9 billion, almost twice the offer size.

READ: Declining rate prompted full award of T-bonds

Despite such a level of demand, creditors asked for an average rate of 6.207 percent, higher than the 6.118 percent seen in the previous auction of 10-year T-bonds last Feb. 18.

Even then, that yield was lower than the 6.24 percent quoted for the comparable tenor in the secondary market as of March 17.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the rout in German bonds — as investors reacted to the upcoming surge in the Berlin’s spending plans for defense and infrastructure — continued to be felt around the world, including in the Philippines.

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 intended to be raised domestically, of which P60 billion will be via short-dated 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.