Gov’t further ramping up domestic borrowings in June

The Bureau of the Treasury will ramp up domestic borrowings to P215 billion in June through weekly treasury bills and bond issuances to take advantage of strong market reception to longer debt tenors.

In a May 26 memorandum to all government securities eligible dealers, National Treasurer Rosalia de Leon said a total of P75 billion in T-bills plus P140 billion in bonds would be offered next month.

T-bonds auction will also be held weekly in June, instead of the previous twice-a-month schedule. The Treasury’s domestic borrowings program for the month is about 26 percent higher than the P170 billion in April and May.

It will sell P35 billion in T-bonds every Tuesday auction during the month or a total of P140 billion.

The bond tenors will be 20-year on June 1, seven-year on June 8, 10-year on June 15 and five-year on June 22.

“Previous auctions saw good reception on long tenors as investors hunt for better yields,” De Leon explained.

In the meantime, the weekly T-bills offering will be reduced to P15 billion per week from P25 billion in April and May.

The Treasury, nonetheless, has five weeks to auction off short-dated debt paper starting May 31, which will be issued to investors two days later or on June 2, hence included in the June borrowings program.As such, P5 billion each in the benchmark 91-day, 182-day and 364-day IOUs will also be sold on June 7, 14, 21 and 28.

Last month and this month, the T-bills mix included P5 billion in three-month, P8 billion in six-month and P12 billion in one-year IOUs.Last week, the Development Budget Coordination Committee kept the 2021 gross borrowings program at a record P3.03 trillion, of which the bulk amounting to P2.58 trillion would be borrowed from domestic sources, mainly through the sale of treasury bills and bonds.The government preferred to source debt locally amid flushing liquidity, and also to minimize foreign-exchange risks.By end-2021, the Philippines’ outstanding debt will reach P11.5 trillion, equivalent to 57.8 percent of gross domestic product (GDP).

As of end-March, the debt-to-GDP ratio hit a 16-year high of 60.4 percent, already breaching what credit-rating agencies considered as the manageable public debt threshold of 60 percent, no thanks to the prolonged pandemic-induced recession which spilled over to the first quarter of this year. INQ