Gov’t set to borrow P190B in April

THE government has set a P190-billion borrowing program for April focused on short-term tenors, even reintroducing a 35-day term, as investors shun securities with longer maturities amid ongoing uncertainties.

In a memorandum issued Thursday, the Bureau of the Treasury (BTr) said next month’s borrowing plan will consist of P130 billion in Treasury bills (T-bills) and P60 billion in Treasury bonds (T-bonds).

The April borrowing plan is a departure from the usual quarterly program released by the Treasury. The BTr said they want to assess developments as they go along as the market is filled with uncertainty due to the coronavirus disease 2019 (COVID-19) pandemic.

“Situation is still fluid. We will monitor developments and assess [the] results of our auctions in April to determine if full issuance program for second quarter can be released,” National Treasurer Rosalia V. de Leon told reporters via Viber yesterday.

Ms. De Leon said the BTr has offered the 35-day papers in the past, adding that its plan to auction off this tenor next month is meant to accommodate a shift in demand from the central bank’s term deposit facility (TDF), which was suspended last week.

“BSP suspended TDF. The 35-day bill provides outlet for investors while at the same time provides funds for our short-term requirements,” she said.

Broken down, the government will offer T-bills every Monday, broken down into P10 billion for the 91-day tenor and P5 billion each for 182- and 364-day T-bills, while the 35-day tenor will be auctioned off fortnightly at P15 billion each.

For the T-bonds, the Treasury will auction off P30 billion in one-year securities on April 14, and another P30 billion in two-year bonds on April 28.

Ms. De Leon said short-term tenors are more attractive to investors now as they prefer to hold on to their cash amid disruptions caused by the virus.

“Cash remains king as markets continue to remain watchful of impact of measures to battle COVID,” she said.

A trader said the shorter tenors could restore calm to the market.

“It’s nice to see that they are issuing very short bonds. It can help calm the market also as it won’t add to [the] current supply of the longer tenor,” a bond trader said via Viber yesterday.

The trader said a shorter borrowing plan will help the market focus on “fundamentals and address liquidity needs, if there are, rather than focus on the yield curve.”

In the first three months of the year, the government raised just P315.261 billion out of its P420-billion local borrowing program.

It raised P196.475 billion in T-bills out of the P240-billion plan and P118.786 billion from T-bonds, also short of the P150-billion program.

In February, the BTr also raised a record-high P310.8 billion from the sale of three-year retail Treasury bonds at a coupon of 4.375% amid strong demand.

It likewise sold €1.2 billion worth of euro-denominated bonds in January — €600 million each for three-year and nine-year papers. The issue was priced at a rate of 0.1% for the three-year papers and 0.7% for nine-year bonds.

The government earlier said it plans to raise P1.4 trillion this year from local and foreign lenders. — Beatrice M. Laforga