THE government plans to borrow P70 billion from the domestic market in December, as it reduced borrowings after seeing strong demand for its retail Treasury bonds (RTB).

In an advisory posted on Thursday, the Bureau of the Treasury (BTr) said it would borrow P30 billion in Treasury bills (T-bills) and P40 billion in Treasury bonds (T-bonds) next month.

The December borrowing plan is lower than the P200-billion program initially set in November.

The BTr will offer T-bills worth P30 billion in total next month. Broken down, the government will offer P2 billion in 91-day debt papers, P3 billion for the 182-day instruments, and P5 billion for the 362-day notes on Nov. 29. The Treasury will again offer the same amounts on Dec. 6 and Dec. 13.

For the longer-term T-bonds, the government will auction off P20 billion in 10-year securities on Dec. 7, and another P20 billion for its 7-year debt papers on Dec. 14.

National Treasurer Rosalia V. de Leon told reporters in a Viber message on Thursday that the December borrowing program is lower because there will be fewer auctions in the lead up to the Christmas holidays.

“Moreover, given that we have been seeing strong demand for our ongoing RTB 26 issuance, we have the room to scale down our December auction sizes, especially the T-bills as this will allow us to lengthen our domestic average residual maturity,” she said.

“Given these, the reduction in our December borrowing program will ensure that we remain within our annual borrowing program and maintain our debt-to-GDP at sustainable levels.”

The country’s debt-to-GDP ratio was 63.1% as of September, the highest in 16 years, government data showed.

A bond trader in a Viber message said the lower borrowing program in December is expected due to the strong reception to the RTB offering.

“Since December borrowing program is much lower compared to the P200-billion plan this month, we may see yields to continue to move range bound with downward bias on strong investor demand.”

The Treasury raised a total of P130 billion from T-bills and T-bonds in November, lower than the programmed P200 billion after it canceled auctions of the longer-term securities.

Broken down, it raised P60 billion as planned via the weekly T-bill auctions, then raised P70 billion out of the programmed P140 billion in T-bonds.

The BTr canceled the auctions of P35 billion each in five-year and seven-year T-bonds on Nov. 16 and 23 to give way for the RTB offering.

The Treasury raised an initial P113.545 billion at its price-setting auction on Nov. 16 for its offer of 5.5-year RTBs. This was oversubscribed by more than five times versus the initial P30-billion offer. The RTBs had fetched a coupon rate of 4.625%. It will be issued on Dec. 2 and will mature by 2027.

The government borrows from foreign and local sources to plug its budget deficit. The gap has reached P1.2 trillion in the 10 months to October this year, or 27.94% higher than the shortfall last year. It borrows from both local and foreign lenders to plug this fiscal gap seen to hit 9.3% of gross domestic product this year. — Jenina P. Ibañez