THE Bureau of the Treasury (BTr) is targeting to borrow P200 billion from the local debt market in April.
Bulk of the total or P140 billion is programmed to be raised through selling Treasury Bonds (T-bonds) while the remaining P60 billion will come from Treasury Bills (T-bills), based on the schedule released by the Treasury last Wednesday.
April’s target is less than P250 billion programmed to be raised this March given the fewer number of auction dates that fell on Mondays and Tuesdays—the usual schedules for auctions of government securities.
National Treasurer Rosalia V. De Leon said they considered market conditions as well as the funding requirements for the second quarter of the year in calibrating the domestic borrowing program for the month.
On Tuesday, De Leon expressed optimism that investors will demand “reasonable” bid rates for T-bills despite the market pricing in a higher inflation forecast by monetary authorities. Last week, the country’s central bank maintained monetary policy rates at a record low of 2 percent, even while conceding that inflation is likely to breach the target range again for this year.
Still better vs US
FINANCE Undersecretary Mark Dennis Y.C. Joven told the BusinessMirror last Monday (See, “PHL braces for higher interest rates, borrowing costs in ’22,” March 28, 2022) they remain optimistic that the increase in rates being demanded by investors in the government’s auctions of debt papers would taper off moving forward since the country’s inflation rate is still better than that of US.
For March, the Treasury only raised P91.7 billion, more than one-third of its P250 billion programmed offering as investors sought higher yields amid the Russia-Ukraine war and the recent hawkish signals from the US Federal Reserve that it could further raise rates if necessary to rein in inflation.
In April, the Treasury is set to auction off P15 billion in T-bills for each of the four Mondays of the month.
Meanwhile, P35 billion worth of T-bonds per auction day is slated to be offered on all four Tuesdays of the month. Three-year T-bonds will be sold on April 5 while 4-year T-bonds are up for auction on April 12. Seven-year and 10-year T-bonds will be offered on April 19 and 26, respectively. For this year, the government is expected to borrow a total of P2.2 trillion, around 75 percent of which is expected to come from domestic sources.
As of end-January this year, the government’s outstanding debt has already hit a new record-high of P12.03 trillion as the country needed to borrow more to cover a yawning budget deficit.