(Sept 29): The Philippines raised 84.9 billion pesos (RM5.54 billion) in a retail Treasury bond auction, securing fresh funds for government spending while opting for a shorter tenor amid elevated interest rates.

The 2.5-year bonds due 2029 fetched a coupon of 6.875% at the price-setting auction Tuesday, with bids totalling 188.6 billion pesos. The coupon rate is comparable to the 6.865% yield on the existing 2.5-year government bond based on the Bloomberg evaluated pricing service BVAL.

The government will offer the bonds to the public through Oct 7, and existing holders may exchange notes due this and next year for the new securities.

Bond sales to retail investors are a big source of financing for the Philippine government, making up a significant share of its annual borrowings. Other countries across Asia, including Indonesia and India, are also broadening retail access to such debt to diversify their investor base beyond institutional and foreign holders.

Retail bonds in the Philippines are typically offered in smaller denominations of 5,000 pesos, making them accessible to a large base of savers seeking higher returns than bank deposits. They have generally been well received, with the issuance in August 2025 raising 507.2 billion pesos after a record sale of 585 billion pesos in February 2024.

The decision to issue a shorter tenor is a strategic move, National Treasurer Sharon Almanza said at a media briefing.

“Given where the rates are and how defensive the market is, we also want to make sure that we are not adding costs for the government,” she said. “We’re still hoping that by next year, rates will moderate. So definitely, we don’t want to lock in at a very high rate.”

Borrowing funds from retail investors, a programme first introduced in 2001, could reduce the borrowing costs for Philippine President Ferdinand Marcos Jr’s administration at a time when high inflation and a selloff in the global debt market have sent rates soaring. The central bank has signalled further interest-rate hikes to contain inflation which has accelerated as the peso falls and oil prices rise.

The government plans to borrow a total of 2.73 trillion pesos this year before raising another 3.3 trillion pesos in 2027.

The government aims to raise 150 billion pesos in new money from the current borrowing exercise and expects an additional amount from the bond exchange, Almanza said. The funds will help finance various government projects, including agriculture, education, healthcare and infrastructure, according to the treasury bureau.

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