THE Bureau of the Treasury (BTr) is monitoring market demand for new issuances as it finalizes its borrowing plan for the second half of the year, National Treasurer Rosalia V. de Leon said on Tuesday.

“[We] will continue watching market appetite. Depends on real rates,” Ms. de Leon told reporters via Viber when asked if the BTr is considering a debt exchange program in the second semester for liability management.

The official said the market’s appetite will determine if a debt switch offer will be launched and if this would be offered as a standalone program.

The government does liability management exercises to improve its debt profile. These may include debt switch offers to swap issuances nearing maturity for cheaper or longer tenors.

Its most recent bond swap program was in March, which it held along with a retail Treasury bond (RTB) offering. It raised P411.6 in fresh funds via the three-year RTBs and P51.5 billion from the switch offer.

“A debt exchange or a debt swap is usually meant to replace those illiquid bonds in the interest of an opportunity for investors to hold more liquid bonds — which will eventually lead them to trade efficiently in the secondary market. It’s a win-win for both investors and the government,” a bond trader said in a Viber message on Tuesday.

“Such a program will also improve credibility of the government securities yield curve as it should increase the amount of the existing liquid bonds in the market,” the trader added.

The government is looking to raise P3 trillion this year from domestic and external lenders to help fund its budget deficit seen to hit 9.4% of gross domestic product. — BML