Gov’t sets PHP 735B local borrowing in Q2

The national government is looking to borrow PHP 735 billion from the domestic market in the second quarter, the Bureau of the Treasury (BTr) said on Thursday.

In a notice on its website, the BTr said it seeks to raise P325 billion from Treasury bills (T-bills) and PHP 410 billion via Treasury bonds (T-bonds) in the April-to-June period.

The domestic borrowing plan for the second quarter is 16.85% higher than the PHP 629-billion program for the first quarter. It is also 3.23% up from the PHP 712 billion raised in January to March this year.

In April, the government plans to borrow PHP 245 billion domestically, consisting of PHP 125 billion in T-bills and PHP 120 billion in T-bonds.

The government will hold auctions for T-bills on March 31, April 7, 14, 21, and 28. It will try to raise PHP 8 billion via the 91- and 182-day tenors, and PHP 9 billion from 364-day T-bills every week.

The Treasury will offer PHP 30 billion worth of five-year T-bonds on April 2, seven-year T-bonds on April 8, 10-year T-bonds on April 15, and 15-year T-bonds on April 22.

The T-bond auction was moved to April 2 since April 1 was declared a holiday in observance of Eid’l Fitr or the Feast of Ramadan.

In May, the BTr will seek to raise PHP 260 billion — PHP 100 billion via T-bills and PHP 160 billion via T-bonds. T-bill auctions are scheduled for April 28, May 5, 12, 19, and 26.

It will borrow PHP 8 billion via the 91- and 182-day tenors and PHP 9 billion via the 364-day T-bills every week.

For the long-term debt, the government will offer PHP 30 billion each in five-year T-bonds on April 29, seven-year debt paper on May 6, 10-year T-bond on May 20, and 15-year notes on May 27.

It will also borrow a combined PHP 40 billion via three-year and 20-year bonds on May 13.

For June, the Treasury seeks to borrow PHP 230 billion from the domestic market, comprised of P100 billion from T-bills and P130 billion from T-bonds.

It will seek to raise PHP 8 billion each via 91-day and 182-day T-bills, and PHP 9 billion via 364-day T-bills at the auctions on June 2, 9, 16 and 23.

For T-bonds, the Treasury will sell PHP 30 billion each in five-year debt paper on June 3, seven-year T-bonds on June 10, and 10-year bonds on June 17.

The government will also offer an aggregate amount of PHP 40 billion from three-year and 25-year bonds on June 24.

A trader said in a text message that the target amount for the second quarter was expected as the BTr is looking to add more long-term debt to its portfolio.

“The BTr will look to extend duration/lengthen its maturity profile. [The amount was] pretty much the same issue size as the past quarter and the same mix too,” the trader said.

Meanwhile, the strong demand for T-bills seen in the first quarter may have prompted the Treasury to offer more short-term papers, the trader added.

The BTr upsized the award for seven T-bill auctions out of the 12 auctions in the January-to-March period.

The trader said that yields for tenors shorter than five years could continue to ease, while longer-dated bonds could steadily go higher based on the current trajectory of policy rates and inflation.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has signaled 50 to 75 basis points (bps) in rate cuts this year.

The government may have increased its borrowing plan for the second quarter as a safety against risks arising from the Trump administration, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Given the present environment of uncertainty and DisTRUMPTION, borrowing early is sound as upside risks remain that could push inflation and interest rates higher,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas likewise said in a Viber message.

However, Mr. Ricafort noted that more borrowings could still be required later in the year as some of the large debts incurred at the start of the pandemic have started to mature.

The government borrows from local and foreign sources to help fund its budget deficit, which is capped at P1.54 trillion or 5.3% of gross domestic product this year. — A.M.C. Sy