THE GOVERNMENT plans to borrow P220 billion locally in the last three months of this year, smaller than what it had programmed for this semester and for the same period last year, the Bureau of the Treasury announced on Friday.

The Treasury’s October-December local borrowing program is smaller than this quarter’s P230 billion and the P270 billion it planned to raise in 2018’s fourth quarter.

BTr is looking to raise P100 billion in Treasury bills (T-bills) and P120 billion via Treasury bonds (T-bond) from October to December this year.

Broken down, it plans to offer P8 billion for 91-day tenor and P6 billion for both the 182- and 364-day T-bills on Oct. 9 and 23, Nov. 6 and 20, and Dec. 4.

The government will also auction off T-bonds consisting of P20 billion per offer of three-year notes on Oct. 3 and Dec. 12, five-year papers on Oct. 17, seven-year debt on Oct. 31, 10-year notes on Nov. 14 and 20-year papers on Nov. 28.

National Treasurer Rosalia V. de Leon said in a phone message that the programmed borrowing will act as a “strong cash buffer to meet fourth-quarter requirements”.

This quarter, the government raised P198.382 billion from domestic lenders out of the programmed P230 billion.

For this year, the government set a P1.189-trillion borrowing program to help plug the budget deficit capped at 3.2% of gross domestic product. Of the total, 73% will be sourced from local lenders while the remaining 27% will be from external creditors.

Robinsons Bank Corp. peso debt trader Kevin S. Palma said the Treasury opted for a smaller borrowing program as “inflation is expected to remain subdued in the foreseeable future, hence borrowing costs may continue to ease”.

“Strong demand will persist more so on the short-end to belly of the offerings as investors continue to anticipate the timing of the RRR cut sometime in 4th quarter, coupled with reinvestment requirements from a jumbo bond that will mature in November that amounts to some Php 197 billion,” Mr. Palma said.

The central bank on Thursday slashed the benchmark interest rates by 25 basis points for the third time this year, bringing the overnight reverse repurchase and the overnight deposit and lending to four percent, 3.5% and 4.5%, respectively.

On Friday, it also decided to slash in November the reserve requirement ratio by 100 basis points more for universal and commercial banks, thrift banks and rural banks to 15%, five percent and three percent, respectively, after reductions of up to 200 bp earlier this year that culminated at end-July. — Beatrice M. Laforga