Gov’t to borrow P325B locally in second quarter

THE GOVERNMENT is set to borrow P325 billion from the domestic market next quarter through auctions of securities, the Bureau of the Treasury (BTr) announced on Tuesday.

In a memorandum posted on its website, the Treasury said it will auction off P195 billion in Treasury bills (T-bills) and P130 billion worth of Treasury bonds (T-bonds) in the next three months.

The planned borrowing for the April-June period is higher than the P240 billion it offered in the first quarter and is more than the P180 billion placed on the auction block in the same quarter last year.

This is because Treasury auctions will now be held twice a week in the second quarter, compared with the once-a-week offerings done in the January-March period.

Broken down, the government will borrow P15 billion via T-bills — P5 billion in 91-day papers, P4 billion in 182-day debt, and P6 billion in the 364-day tenor — in auctions set on April 2, 10, 16, 23 and 30; May 7, 14, 21 and 28; and June 4, 11, 18 and 25.

Meanwhile, for the T-bonds, the Treasury will auction off three-year papers on April 3, May 8 and June 13; five-year debt notes on May 2; and seven-year bonds on April 11, May 15 and June 5.

Ten-year bonds will also be offered on April 17, May 22 and June 19, while 20-year bonds will be auctioned off on April 24, May 29 and June 26.

In a separate memorandum, BTr said the modification in the issuance program was done “based on prevailing market conditions, auction results during [the first quarter of 2017], and domestic and external market events.”

In a text message, National Treasurer Rosalia V. De Leon added that the adjusted issuance program was also based on “market sentiment, including bias towards short tenors.”

“Furthermore, the BTr crafted the issuance program in close coordination with the market to maximize its participation in the fund raising of the national government,” the Treasury added in the memorandum.

In the first quarter, out of its P240-billion program, the government only borrowed a total of P124 billion from domestic creditors, with bulk of awards made in Treasury bills, as it chose to make partial awards and rejections due to higher rates.

Meanwhile, a bond trader said the increase in volume and frequency of the Treasury’s capital-raising activities will support the government’s socioeconomic programs.

“Maybe in their assessment, this is what is required to help fund the government’s socioeconomic program,” the trader said in a phone interview.

The government is embarking on an P8-trillion infrastructure spending program until 2022 in an effort to boost economic growth to 7-8% until then.

The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

Last week, the government raised 1.46 billion renminbi from its maiden three-year “panda” bond sale amid “overwhelming” demand from both onshore and offshore investors. — Karl Angelo N. Vidal