Outstanding domestic IOUs dipped to P7.9T in Nov

Outstanding debt raised from locally issued IOUs slightly declined to P7.9 trillion as of end-November from the record-high P7.93 trillion in October as the government allowed more short-dated securities to mature in a bid to pull its debt ratio below 60 percent by yearend.

The latest Bureau of the Treasury data on Tuesday showed that outstanding treasury bills further declined to P852.1 billion last month from end-October’s P905.5 billion. While the volume of 91-day treasury bills was steady at P130 billion, outstanding 182- and 364-day debt dropped to P196 billion and P526.1 billion, respectively.

On the other hand, outstanding fixed-rate treasury bonds inched up to P7.05 trillion in November from P7.02 trillion a month ago.

Outstanding bonds included P252.5 billion in three-year; P506.8 billion in five-year; P908.9 billion in seven-year; and P966.5 billion in 10-year.

The outstanding amount for 10-year agrarian reform bonds was P7.5 billion; P475.2 billion in 20-year; P235.9 billion in 25-year; and P97.1 billion from the $6.582-million Philippine Par Bond redenominated into 28.5 years.

Also outstanding were P2.43 trillion in retail treasury bonds (RTBs); P1.1 trillion in benchmark bonds; P50 billion in 25-year CB-BoL T-bonds; P25.2 billion in onshore dollar T-bond; P80.3 billion in the first-ever retail dollar bonds (RDBs) issued on October; and P6.6 billion in one-year “premyo” bonds maturing this month.

Manageable debt

With P360 billion raised from 5.5-year RTBs in November, the Treasury slashed its weekly T-bill and bond offerings for December so that the debt-to-gross domestic product (GDP) ratio would end 2021 at the targeted 59.1 percent.

As debt jumped 27.2 percent year-on-year during the first nine months and outpaced the average of 4.9-percent economic growth, debt-to-GDP— which reflected capability to repay obligations —jumped to a 16-year high of 63.1 percent.

The end-September debt-to-GDP exceeded the 60-percent level deemed by debt watchers as manageable for emerging markets such as the Philippines.

Economists had warned that ballooning debt may downgrade the country’s investment-grade credit ratings.

The national government’s outstanding obligations were expected to settle at P11.73 trillion by yearend, although the end-October debt pile already hit a record P11.97 trillion.

The government sources the bulk of its borrowings locally, through the sale of treasury bills and bonds, in order to mitigate foreign exchange risks while taking advantage of excess liquidity.

This year, the government had programmed to borrow a gross amount of P3.07 trillion, of which P2.49 trillion or 81 percent of total were to be sourced from the domestic debt market.

For 2022, budget documents had shown that the national government will borrow from the domestic debt market P1.91 trillion or 77 percent of the P2.47-trillion total gross borrowings.

Last week, National Treasurer Rosalia de Leon said the government will be borrowing less from the local debt market next year “to make room for the private sector with renewed lending following the opening of the economy.”