US dollar banknotes are seen in this illustration taken on March 24. — REUTERS

THE GOVERNMENT is looking at tapping the offshore bond market in the second quarter, the Bureau of the Treasury (BTr) said.

“We still have $2.5 billion left in the borrowing program, so we are looking at whether we issue (in the) second quarter or third quarter,” National Treasurer Sharon P. Almanza told reporters on the sidelines of an event on Thursday.” There is a possibility for a second-quarter issuance.”

In January, the government raised $2.75 billion from a triple-tranche dollar bond issuance. It generated $500 million from the 5.5-year bonds at a coupon rate of 4.25%; $1.5 billion from the 10-year paper at a coupon rate of 5%; and $750 million from the 25-year papers at a 5.75% coupon.

Ms. Almanza said US Treasury yields have remained relatively stable compared with local rates, creating a less volatile environment.

Meanwhile, the BTr is hoping the central bank’s off-cycle policy move on March 26 will help calm markets and drive demand for government securities in the coming quarter.

This follows the drop in bids and spike in yields in March after the US-Israeli war on Iran began. 

The Bangko Sentral ng Pilipinas (BSP) kept its policy rate unchanged at 4.25% during a surprise off-cycle meeting last week, amid growing concerns over the impact of the Middle East war on the economy.

BSP Governor Eli M. Remolona, Jr. had said they decided to stand pat as their growth outlook remains clouded and as emerging inflationary risks prove supply-driven, “for which monetary policy has limited effectiveness.”

The BSP now expects headline inflation to average 5.1% this year from 3.6% previously. If realized, the headline print would breach its 2%-4% target.

Ms. Almanza said that a large maturity in April worth about P200 billion could add liquidity to the market and drive demand for government securities.

“We have a maturity in April. So, hopefully, those funds will be reinvested,” she said.

The government is looking to borrow up to P784 billion from the domestic debt market in the second quarter or up to P364 billion via Treasury bills and up to P420 billion through Treasury bonds.

Ms. Almanza noted that the borrowing plan for the second quarter includes a mix of short-term and medium-term securities.

“We’re combining the long with the short. And then we’re reducing the volume for the longer tenors,” she said.

Ms. Almanza also said foreign participation in the government securities market could surge as soon as the country’s re-entry into JPMorgan Chase & Co.’s Government Bond Index-Emerging Markets (GBI-EM) is confirmed by the first week of April.

“They said that the investors don’t wait for the actual inclusion. So, after the announcement, funds will [start coming in already],” she said.

In September last year, Philippine peso-denominated government bonds (RPGB) were tagged as “Index Watch Positive,” which is the final review phase for the bonds’ potential inclusion in JPMorgan’s GBI-EM.

JPMorgan’s GBI-EM tracks the performance of sovereign and quasi-sovereign bonds issued by emerging market countries. The country’s inclusion will need to be approved by a certain percentage of investors reviewing the index.

The Philippines’ global peso notes were removed from the GBI-EM in January 2024 due to illiquidity. Potential inclusion in the index are RPGBs issued from 2023 with tenors up to 20 years. — A.M.C.Sy

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