Government to borrow less next quarter

THE GOVERNMENT plans to raise up to P150 billion from domestic lenders next quarter, 23% less than the P195 billion programmed in the three months to September, according to the Bureau of the Treasury, with tenor distribution reflecting investor preference for shorter-termed papers.

Next quarter’s program, however, is 11% more than the P135 billion planned a year ago.

A Sept. 22 memorandum on the Treasury’s Web site showed that next quarter’s program will consist of:

• five Treasury bill auctions, with offer size kept at P15 billion per auction;

• as well as four-, seven and 10-year Treasury bonds with offer size of P15 billion for each of the five auctions.

There will be up to P75 billion worth of T-bills on offer, consisting of P30 billion worth of 91-day papers, P25 billion of 182-day papers and P20 billion worth of 364-day debt.

The P75 billion worth of T-bonds to be offered will consist of P30 billion each of four- and seven-year papers, as well as P15 billion worth of the 10-year debt.

The 20-year paper, last sold on July 27, will not be offered next quarter.

Deputy Treasurer Erwin D. Sta. Ana attributed the smaller program next quarter to the upcoming holidays. “December really is a shorter month with respect to fund-raising. We usually just do auctions in the first two weeks,” he told reporters after yesterday’s T-bill auction.

Mr. Sta. Ana noted there continues to be healthy demand for government debt, especially for shorter-dated papers.

ENOUGH LIQUIDITY
“Liquidity levels are quite ample, as evidenced by this auction,” Mr. Sta. Ana said of yesterday’s T-bill offer.

“Talk about four times, in general, oversubscribed. That goes to show that there’s enough liquidity in the system.”

Sought for comment, a bond trader said in a telephone interview that the Treasury took into consideration investors’ preference over shorter-dated debt in the face of a likelihood of another US Federal Reserve interest rate increase in December.

“Given interest rates are on the rise, the preference of the market now is for shorter securities. That’s one of the considerations of BTr in its borrowing plan,” the trader said.

Another trader said that “liquidity and demand is still strong”, adding that “[t]here’s lower auctions since they will fall on the holidays.”

The government has programmed P727.64 billion in borrowings this year, 80% or P582.11 billion of which will be sourced from local lenders through T-bills and T-bonds. The P145.53 billion balance will be borrowed from foreign creditors. — Elijah Joseph C. Tubayan/Reuters