THE NATIONAL GOVERNMENT (NG) plans to borrow P200 billion from the domestic market in March, the Bureau of the Treasury (BTr) said on Wednesday.

For March, the BTr plans to raise P75 billion from the issuance of Treasury bills (T-bills) and P125 billion from Treasury bonds (T-bonds).

The short-dated T-bills will be offered at P5 billion each with benchmark tenors of 91, 182, and 364 days. Auctions will be held on Feb. 27, March 6, 13, 20, and 27.

For the long-term securities, the Treasury is looking to raise P25 billion from six-year T-bonds on Feb. 28, and P25 billion from 10-year T-bonds on March 7.

It also plans to generate P25 billion from the offer of 13-year instruments on March 14; P25 billion from 20-year bonds on March 21; and P25 billion from seven-year papers on March 28.

“The National Government’s borrowing program of P200 billion for the month of March 2023 is the same as the target for February 2023,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

However, the February borrowing plan was reduced to P130 billion from the original P200 billion after the government launched a retail Treasury bond (RTB) offer and canceled two auctions worth P35 billion each.

This month, the government raised P127.65 billion from domestic borrowings.

“The BTr is still in ‘good shape’ following the recent RTB offering,” a trader said in a Viber message.

Earlier this month, the government raised P283.711 billion from its offering of five-and-a-half-year RTBs. Of this total, the government raised P31.671 billion from the bond exchange offer program.

The bonds carry a coupon rate of 6.125% and are set to mature on Aug. 22, 2028.

However, the trader noted that the planned borrowing is still higher than expected maturities for March, and the current policy rate is still higher than those for the shorter tenors. 

“[The] BSP (Bangko Sentral ng Pilipinas’) policy rate is at 6% while [the] 5-year bonds and shorter are either at par or even lower than the policy rate,” the trader added.

The central bank raised the key interest rate by 50 basis points (bps) last week to a near 16-year high of 6%. The rates on the overnight deposit and lending facilities were also increased to 5.5% and 6.5% respectively.

The BSP has now raised borrowing costs by 400 bps since May 2022 to curb red-hot inflation.

“So rates at these auctions may warrant higher rates than current levels,” the trader said.

Meanwhile, Mr. Ricafort said the downward trend in long-term local rates since November could be favorable for the T-bond auctions.

“The upcoming $3-billion five-year retail bonds denominated in US dollars and/or euros in the latter part of first quarter 2023 or early second-quarter 2023 could become a consideration as well,” he added.   

Last month, National Treasurer Rosalia V. de Leon said the government is planning to launch a retail dollar bond offering.

For this year, the National Government’s gross domestic borrowing program is set at P1.654 trillion, composed of P54.1 billion in T-bills and P1.6 trillion in fixed-rate T-bonds.

The government borrows from domestic and external sources to finance its budget deficit, which is capped at P1.47 trillion or 6.1% of gross domestic product this year. — Aaron Michael C. Sy