Treasury scales down T-bill, bond offerings for December

To keep the national government’s debt ratio below 60 percent by year-end, the Bureau of the Treasury has reduced the weekly volume of debt paper it will auction off in December to raise only P70 billion.

In a Nov. 24 memorandum to all government securities eligible dealers, National Treasurer Rosalia de Leon said the Treasury would offer P10 billion in short-dated T-bills—P2 billion in the benchmark 91-day, P3 billion in 182-day and P5 billion in 364-day bills—in the auctions on Nov. 29, Dec. 6 and 13. In previous months, the weekly treasury bills volume was P15 billion, with P5 billion each offered across the three tenors.

As for fixed-rate treasury bonds, P20 billion each in 10-year and seven-year IOUs will be sold on Dec. 7 and 14, respectively. The Treasury had been selling P35 billion worth of bonds per auction prior to December.

De Leon on Thursday said fewer auctions were scheduled for December as the Christmas holidays drew close.

“Given that we have been seeing strong demand for our ongoing RTB (retail treasury bill) issuance, we have the room to scale down our December auction sizes, especially the T-bills as this will allow us to lengthen our domestic average residual maturity,” De Leon said. The ongoing sale of 5.5-year RTBs will end on Friday, with settlement on Dec. 2.

Also, “the reduction in our December borrowing program will ensure that we remain within our annual borrowing program and maintain our debt-to-GDP (gross domestic product) at sustainable levels,” De Leon said.

As of end-September, the national government’s debt-to-GDP further climbed to a 16-year high of 63.1 percent, above the 60-percent level deemed by credit rating agencies as manageable among emerging markets like the Philippines. During the first nine months of 2021, the 27.2-percent year-on-year jump in obligations outpaced the 4.9-percent average real GDP growth.

The debt-to-GDP ratio, which reflected an economy’s ability to repay its obligations, had been programmed to end 2021 at 59.1 percent, as the national government’s outstanding debts were expected to settle at P11.73 trillion by year-end.

For 2021, the government had programmed to borrow a gross amount of P3.07 trillion, of which locally sourced borrowings through T-bills and bonds would account for the larger P2.49-trillion chunk. As of end-October, gross domestic financing already hit P2.23 trillion, the latest Treasury data on Thursday showed.

De Leon had said the Treasury had no target volume for the Duterte administration’s ninth and the government’s 26th overall RTB sale, as this latest offering won’t be a “jumbo” issuance like the prior fund-raising from these IOUs aimed at small investors.

—Ben O. de Vera