THE NATIONAL GOVERNMENT (NG) plans to borrow P200 billion locally in October, the Bureau of the Treasury (BTr) said on Wednesday.

The October borrowing plan has the same amount as that in September but is 7% lower than the P215-billion program for August.

The government raised just P88.58 billion from domestic borrowings this month, along with an additional P10 billion when the Treasury opened its tap facility in a Treasury bond (T-bond) auction on Sept. 13.

The BTr will hold weekly auctions for Treasury bills (T-bills), which are projected to raise P60 billion.

According to the Treasury, P5 billion worth of 91-day, 182-day, and 364-day T-bills will be offered on Oct. 3, 10, 17, and 24.

Meanwhile, the four scheduled auctions for T-bonds are estimated to generate P140 billion.

For the long-term tenors, the Treasury is looking to raise P35 billion in three-year T-bonds on Oct. 4; P35 billion in six-year debt papers on Oct. 11; P35 billion in 10-year instruments on Oct. 18; and P35 billion in 13-year bonds on Oct. 25.

National Treasurer Rosalia V. de Leon told reporters in a Viber message that the program is “calibrated to meet [the] NG’s funding requirements against [the] current market backdrop.”

Finance Secretary Benjamin E. Diokno previously said that 75% of debt this year will be sourced from domestic lenders, but the government will still try to raise it to 80%.

“Investors may demand higher yield to part with cash given the higher outlook on rates,” the first trader said, also noting how there are no major maturities in October, unlike in previous months. “Let’s see if BTr will give concessions.”

Likewise, the second trader said that market sentiment for interest rates remains bearish.

“Some developments locally and abroad such as inflation data and employment figures may change that view at any given point,” the second trader said, adding that while investors will remain supportive, they may demand relatively higher bids.

In September, the government raised just P18.58 billion in T-bills, with partial awarding in all four auctions following the US Federal Reserve’s hawkish statements.

At the same time, only P70 billion was raised via T-bonds, against the initial P140-billion program, as two auctions saw full rejections. An additional P10 billion was raised in its Sept. 13 auction.

The Fed hiked its policy rates by another 75 bps last week while signaling larger increases to come as inflation is still way above its 2% target at 8.3% as of August. The US central bank has raised key rates by 300 bps since March, including two other 75-bp moves in June and July.

The Bangko Sentral ng Pilipinas (BSP) also increased its benchmark interest rates by 50 bps to 4.25% on Thursday, hiking borrowing costs by 225 bps since May to rein in rising prices. The consumer price index climbed to 6.3% year on year in August, the fifth straight month that inflation exceeded the BSP’s 2-4% target this year.

The gross domestic borrowing program is at P1.91 trillion this year, composed of T-bills that are expected to bring in P52 billion and fixed-rate T-bonds that are seen to raise P1.86 trillion.

Outstanding debt is expected to rise to P13.43 trillion by the end of 2022 from P12.89 trillion recorded in end-July.

The government estimates the debt-to-gross domestic product (GDP) ratio to drop to 61.8% at the end of the year, from 62.1% as of end-June.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of GDP this year. — Diego Gabriel C. Robles