Gov’t to borrow P630B from local market in Q3

THE GOVERNMENT is looking to borrow P630 billion from the domestic market in the third quarter, the Bureau of the Treasury (BTr) said on Thursday.

The Treasury is targeting to raise P260 billion from Treasury bills (T-bills) and P370 billion via Treasury bonds (T-bonds) in the July-to-September period, it said in a notice on its website.

The borrowing plan for the third quarter is 7.69% higher than the P585-billion program for the second quarter.

The government raised just P498.207 billion this quarter, short of its plan.

For the third quarter, the Treasury will auction off more T-bonds with shorter tenors versus those seen in the April-to-June period, the notice showed, with the offer volumes for bonds with tenors above 10 years being smaller than those with shorter maturities. It will also offer bigger volumes of T-bills in its weekly auctions versus the previous quarter.

In July alone, the government is planning to borrow P215 billion, made up of P100 billion in T-bills and P115 billion in T-bonds.

The government will hold five auctions of T-bills next month and will look to raise P6.5 billion via the 91- and 182-day tenors at each offering. It will also offer P7 billion in 364-day T-bills weekly. Next month’s auctions will be held on July 1, 8, 15, 22 and 29.

Meanwhile, the BTr will look to raise P30 billion via T-bonds in three of its four auctions in July, namely via five-year bonds on July 2, seven-year papers on July 9, and 10-year debt on July 16. For its last bond auction next month, it is seeking to borrow P25 billion via the 20-year tenor on July 23.

In August, the government wants raise P220 billion from the domestic market, or P80 billion from T-bills and P140 billion via T-bonds.

Broken down, the BTr will offer P6.5 billion worth of 91-day and 182-day T-bills and P7 billion in 364-day papers at its auctions on Aug. 5, 12, 19, and 27.

For the long-term papers, the government will offer P30 billion each in three-year T-bonds on July 30, five-year debt on Aug. 6, and seven-year bonds on Aug. 13. Meanwhile, it will look to raise P25 billion apiece through 14-year bonds on Aug. 20 and from 20-year papers on Aug. 28.

Lastly, for September, the Treasury is planning to raise P195 billion from the domestic market, or P80 billion through T-bills and P115 billion via T-bonds.

The BTr has four T-bill auctions scheduled in September. It will offer P6.5 billion in 91-day and 182-day T-bills and P7 billion in 364-day T-bills at each of its offerings on Sept. 2, 9, 16, and 23.

As for the long-tenored T-bonds, the Treasury wants to raise P30 billion each from three-year bonds on Sept. 3, via five-year papers on Sept. 10, and from 10-year debt on Sept. 17. The BTr will also look to borrow P25 billion via 20-year bonds on Sept. 24.

The Treasury likely upsized its planned T-bill offers for next quarter amid expectations of lower rates in the near term, a trader said in a text message.

“Demand should be good, especially if the Bangko Sentral ng Pilipinas (BSP) reiterates its rate cut outlook,” the trader said, adding that rates could be steady to lower, also depending on the central bank’s stance.

The increase in T-bill supply is likely “for the purpose of further smoothening the local yield curve,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.

“Nonetheless, the schedule … probably points to a posture for looming rate cuts,” Mr. Asuncion likewise said.

The Monetary Board on Thursday kept its policy rate at a 17-year high of 6.5% for a sixth straight meeting, as expected by all 15 analysts in a BusinessWorld poll.

BSP Governor Eli M. Remolona, Jr. on Thursday signaled a “less restrictive” policy stance if there is a sustained improvement in the inflation outlook, adding they are “somewhat more likely than before” to begin their easing cycle by their next meeting, which is on Aug. 15.

Mr. Remolona said they could cut rates by 25 basis points (bps) in the third quarter and another 25 bps in the fourth quarter for a total of 50 bps in easing for the year, depending on data,

The Monetary Board’s Aug. 15 review is its only meeting in the third quarter. Meanwhile, its last two reviews for the year, which will be held in the fourth quarter, are scheduled on Oct. 17 and Dec. 19.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.48 trillion or 5.6% of gross domestic product for this year. — AMCS