Gov’t to borrow P250 billion from domestic market in June

THE NATIONAL Government plans to borrow P250 billion from the domestic market in June, the Bureau of the Treasury (BTr) said on Wednesday.

Next month’s borrowing plan is 25% higher than the P200-billion program for May. However, the government raised just P141.31 billion from domestic borrowings this month.

The BTr will hold auctions for Treasury bills (T-bills) every week, which is projected to raise P75 billion.

The auctions for Treasury bonds (T-bonds) are projected to generate P175 billion.

According to the BTr, P5 billion worth of 91-day, 182-day, and 364-day T-bills will be offered on May 30, June 6, 13, 20, and 27.

For the long-term tenors, BTr is looking to raise P35 billion in three-year T-bonds on May 31; P35 billion in five-year debt papers on June 7; P35 billion in seven-year instruments on June 14; P35 billion in 10-year securities on June 21; and in seven-year papers again on June 27.

National Treasurer Rosalia V. de Leon said in a Viber message to reporters that the “volume has been calibrated based on domestic requirement and past rejections.”

The government spent heavily on its coronavrius disease 2019 (COVID-19) pandemic response, putting more pressure on revenue generation.

A trader said in an e-mailed message that he does not expect the Treasury to scale down its scheduled borrowings in the coming months.

“Not much has changed in the borrowing program of the BTr versus this month’s schedule,” the trader said. “[The] only (difference) is the added week for June, but weekly auctions are still the play.”

The trader said that markets were concerned with bond supply as the BTr has not “tightened the spigot.”

“With this, and this month’s CPI (consumer price index) focus for June, [the] market will continue to be defensive moving forward.”

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the higher borrowing plan reflects the need to finance the widening budget deficit as the government continues to spend for infrastructure projects and pandemic response programs.

The National Government recorded a P187.7-budget deficit as of end-March. Its total debt surged to a record-high P12.68 trillion as of end-March.

“(Government security) maturities and issuances tend to be less shortly before the elections and tend to increase again after the elections, a pattern consistently seen in recent years,” Mr. Ricafort said.

The government borrows from local and external sources to help fund a budget deficit capped at 7.7% of gross domestic product this year.

The National Government has a gross domestic borrowing program of P1.91 trillion this year. Of this amount, T-bills are expected to bring in P52 billion, while the fixed-rate T-bonds are seen to raise P1.86 trillion. — Tobias Jared Tomas