BTr sees strong demand for long tenors

THE Marcos administration is set to borrow P200 billion from the local debt market in September.

The Bureau of the Treasury (BTr) plans to raise P140 billion through longer-term tenors through Treasury Bonds (T-Bonds) and another P60 billion through Treasury Bills (T-bills).

Based on the schedule released by the Treasury on Tuesday, P35 billion worth of T-bonds will be offered for each of the four Tuesdays of the month.

The Treasury will be auctioning off 16-year T-bonds on September 27.

National Treasurer Rosalia V. De Leon expressed confidence there will be a strong demand for the long tenor. De Leon said she has seen this in the 14-year T-bonds the government issued recently.

For the other auction days, T-bonds with a 3.5-year tenor will be sold on September 6 while 10-year debt papers will be offered on September 13. Meanwhile, 7-year T-bonds will be auctioned off on September 20. In terms of Treasury bills, P15 billion in 91-day, 182-day and 364-day tenors will be offered on each of the four Mondays of the month.

In a related development, the Treasury rejected all bids for T-bills on offer as rates rose across the board.

Full award of the 91-day, 182-day and 364-day T-bills would have fetched average rates of 2.685 percent, 3.561 percent and 4.399 percent, respectively, which were all above the secondary market levels.

De Leon said investors asked for higher yields after US Federal Reserve Chair Jerome Powell signaled they would keep interest rates higher for longer to combat inflation.

“Full rejection as market asked for higher yields with Powell’s rhetoric higher for longer from [the] Jackson Hole [Economic Symposium],” she said.

“We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored,” Powell said at the symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming. “We will keep at it until we are confident the job is done.”

Locally, inflation in July has hit 6.4 percent, the highest recorded since October 2018’s 6.9 percent. This brings the Philippines’s average inflation from January to July 2022 to 4.7 percent, beyond the government’s target range of 2 to 4 percent for the year.

The Bangko Sentral ng Pilipinas recently raised its main benchmark rates by another 50 basis points as it expects the inflation rate to reach 5.4 percent for this year, higher than its previous forecast of 5 percent.

Former President Duterte ended his term with the national government’s debt stock soaring to another record-high of P12.79 trillion as of end-June this year as government borrowed more as the economy stalled after imposing mobility restrictions in 2020.

This year, the government is set to borrow a total of P2.21 trillion, of which 75 percent would be sourced locally; the remaining 25 percent will come from foreign sources.

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I HAVE always enjoyed reading Dean West’s blogs, which are insightful and laced with a bit of humor. Dean is founder and president of Association Laboratory Inc., a US firm that provides quality information and strategic insights to association leaders.

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