Gov’t partially awards T-bonds as Middle East tensions push up yield

Treasury Bonds auction results on Tuesday, June 17, 2025

MANILA, Philippines – The Philippine government failed to fully raise its target amount from long-dated local debts during Tuesday’s sale of Treasury bonds (T-bonds) as creditors sought higher rates amid market volatility triggered by the Israel-Iran conflict.

Auction results showed the Bureau of the Treasury (BTr) had borrowed P27.6 billion via reissued T-bonds, which have a remaining life of nine years and 10 months. This was lower than the original plan to raise P30 billion from the offering.

The issuance attracted P55.4 billion in total demand, exceeding the initial size of the offering by 1.8 times. The BTr said there was a “muted market demand” and “higher submitted bid rate.”

The debt paper fetched an average rate of 6.428 percent. This was higher than the 6.226 percent seen in the previous auction of 10-year T-bonds last May 20.

It was also more expensive than the 6.38 percent quoted for the comparable tenor in the secondary market.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said geopolitical tensions in the Middle East continued to unnerve investors.

READ: Israel, Iran trade blows as air war rages into fifth day

All eyes on Israel-Iran conflict

“The 10-year Treasury bond average auction yield was higher and largely attributed to the Israel-Iran attacks that led to higher global crude oil prices,” Ricafort said.

For this year, the Marcos administration is targeting to borrow P2.55 trillion from creditors at home and abroad. The amount is intended to fill a projected budget gap of P1.54 trillion, or equivalent to 5.3 percent of the country’s gross domestic product.

READ: Philippine debt service bill bloats on heavier amortizations

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 short-dated Treasury bills and P1.98 trillion via T-bonds.