THE Bureau of the Treasury (BTr) will likely tap the retail bond market should there be any shortfall in demand in the coming government security auctions, ANZ Research said.
In a report issued Friday, ANZ Research said the Treasury might offer retail Treasury bonds if demand falters at its weekly Treasury bill (T-bill) and Treasury bond (T-bond) auctions.
Based on ANZ’s calculations, BTr’s net bond supply, or the planned borrowing after taking into account maturities, will be smaller for this quarter at P49.1 billion, compared with the P81 billion a year earlier.
The BTr offered three-year retail bonds in June, issuing P121.765 billion which carry a coupon rate of 4.875%.
For this quarter, the government is planning to borrow P360 billion, against the P270 billion it planned to borrow during the fourth quarter.
Some P240 billion will be borrowed this quarter through 12 weekly T-bill auctions of P20 billion each, broken down into P6 billion each for 91- and 182-day notes and P8 billion for 364-day securities. On the other hand, P120 billion worth of T-bonds will also be issued through six fortnightly auctions.
In a text message to BusinessWorld last week, National Treasurer Rosalia V. De Leon said the BTr has a “strong cash carryover” going into 2019, and that there is an increasing appetite for long-term bonds as inflation is expected to decelerate.
ANZ Research added that banks will remain the largest buyer of Philippine government bonds. However, the projected take-up rate of net supply may ease to around 39% from the 41.1% as of October 2018.
Foreign investors, which are captured under the category of custodians, may also take up a lower share in net supply for this year at 8% from the 11.6% in October.
“With inflation likely to ease further in 2019, we expect insurance companies to take up around 8% of the net supply in 2019,” ANZ Reseach added.
The state plans to borrow P1.189 trillion in 2019 to fund its spending plans. Of the amount, 75% will be sourced domestically while the remainder will be from foreign creditors.
However, the 2019 national budget has yet to be passed by Congress and signed into law, leaving the fiscal program hanging so far.
Economic managers of President Rodrigo R. Duterte said they will reassess their assumptions and estimates by late January, according to Budget Secretary Benjamin E. Diokno. — Karl Angelo N. Vidal

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