Philippines sells 10.00 bln PHP of 3-year bond at auction

Philippines sells 10.00 bln PHP of 3-year bond at auction

The Philippine government successfully sold P10.00 billion worth of 3-year bonds at its recent auction, marking a significant funding event for the country's fiscal needs. The auction, held on July 2, 2025, saw strong demand, with the bonds being fully subscribed and the average yield dropping compared to previous offerings.

The Bureau of the Treasury (BTr) reported that the 3-year bond was oversubscribed, with a total tender amounting to P15.62 billion. The average yield for the 3-year bond was 6.23%, a decrease of 4.1 basis points (bps) from the previous auction. The accepted yields ranged from 6.21% to 6.25%, indicating a favorable response from investors.

The strong demand for the 3-year bond can be attributed to several factors. Firstly, the recent easing of monetary policy by the Bangko Sentral ng Pilipinas (BSP), which has reduced key rates, has made borrowing costs more attractive. Secondly, the expected inclusion of Philippine bonds in a major global bond index, such as the GBI-EM Global Diversified index, has boosted investor confidence [2]. Lastly, the recent decline in inflation, which has allowed the BSP to continue lowering interest rates, has also contributed to the strong demand for the bonds.

The successful sale of the 3-year bond is a positive sign for the Philippine government's fiscal health. It indicates that the government can raise funds at competitive rates, which is crucial for managing its budget deficit and funding its development projects. The BTr plans to raise P160 billion from the domestic market this month, with P100 billion through T-bills and P60 billion via T-bonds [1].

The auction was the last of the month and the government successfully raised P103.5 billion from short-term papers in August, exceeding its P100-billion plan. On Wednesday, the government plans to borrow a combined P35 billion via a dual-tranche offering of reissued Treasury bonds [1].

In summary, the sale of the P10.00 billion 3-year bond at the recent auction demonstrates the strong demand for Philippine government bonds, driven by favorable monetary policy, expected index inclusion, and declining inflation. This bodes well for the government's ability to manage its fiscal needs and supports the country's economic growth prospects.

References:
[1] https://www.bworldonline.com/banking-finance/2025/08/27/693876/govt-fully-awards-t-bill-offer-at-lower-yields-before-bsp-review/
[2] https://www.bloomberg.com/news/articles/2025-08-20/bullish-bets-on-philippine-bonds-grow-on-index-inclusion-hopes