By Beatrice M. Laforga
THE GOVERNMENT plans to raise P420 billion from the local market next quarter via short- and long-term debt papers, nearly double the borrowing program it set this quarter.
According to a Dec. 23 memorandum, the Bureau of the Treasury’s (BTr) borrowing plan for the first quarter of 2020 is nearly double the P220-billion program this quarter and also bigger than the P360 billion that was programmed in this year’s first quarter.
The document showed the state will borrow P240 billion through Treasury bills (T-bills) next quarter, similar to what it programmed in first quarter this year.
The Treasury is also looking to raise P180 billion via the sale of Treasury bonds (T-bonds), higher than the previous P120-billion program.
T-bills will be offered at P20 billion per offer, broken down into P8 billion for 364-day papers and P6 billion each for the 91-day and the 182-day securities.
Auction for the short-term papers will be held every Wednesday on Jan. 8, 15, 22 and 29; Feb. 5, 12, 19 and 26; and on March 4, 11, 18 and 25.
T-bonds will be offered every other Thursday at P30 billion per offer.
Specifically, three-year papers will be auctioned off on Jan. 9 and on March 5, five-year debt will be offered on Feb. 6, seven-year instruments will be sold on March 19 while the auction for 10-year securities will be on Feb. 20.
National Treasurer Rosalia V. de Leon said in a mobile phone message on Thursday that a bigger volume of domestic borrowings has been programmed to “take advantage of the liquidity unleashed from RRR (reserve requirement ratio) cuts” implemented this year totaling 400 basis points.
Sought for comment, a bond trader said the government’s bigger spending plan next year, set at P4.1 trillion, means there is a need “to aggressively borrow more.”
“The volume was expected given the recent announcement of DBM (Department of Budget and Management) that reimbursement of 2019 budget reached past 90% in November. That means, the country is set to accomplish its spending goals,” the trader said in a text message.
Hence, the trader said, the investing public can expect bigger volumes of offers and more frequent auctions in 2020.
For offshore borrowings, Ms. De Leon said the government will likely tap the US, European, Japanese and the Chinese markets next year.
“As approved by DBCC (Development Budget Coordination Committee), 25% of the P1.4-trillion (borrowing program for 2020) will be external borrowings,” she said. “We continue to look for cost-efficient funding opportunities including dollar, euro, samurai and panda markets.”
For this quarter, the BTr raised P209.112 billion out of the P220-billion program, broken down into P79.79 billion via T-bills and P129.322 billion from T-bond sales.
This quarter, the Treasury also raised P4.961 billion via the Premyo bonds it sold last month, upsized from its original offer of P3 billion.
Also last month, the government launched its catastrophe-linked bonds through the World Bank, a financial instrument that aims to improve the country’s financial response to natural calamities like earthquakes and storms. The three-year bonds worth $225 million were divided into two tranches, $75 million to cover losses from earthquakes and $150 million for storm losses.
The government borrows from local and foreign markets to fund programs not covered by its revenues.
For next year until 2022, the state will accommodate a budget deficit of up to 3.2% of gross domestic product to support its increased spending plan, particularly on infrastructure, and boost economic activity.