2022 opening salvo: Gov’t to incur P200B in new debts in January

MANILA, Philippines—The Bureau of the Treasury will borrow P200 billion from the domestic debt market in January 2022, with the usual weekly auction volumes to be resumed after slowing down on borrowings this month.

In a Dec. 21 memorandum to all government securities eligible dealers (GSEDs), National Treasurer Rosalia de Leon said the Treasury will auction off P15 billion in T-bills — P5 billion each in the benchmark 91-, 182- and 364-day IOUs — on Jan. 3, 10, 17 and 24, 2022.

The Treasury will also raise P35 billion a week during the T-bond auctions scheduled on the four Tuesdays of January.

On Jan. 4 and 25, the Treasury will sell seven-year securities; four-year debt paper on Jan. 11; and 10-year on Jan. 18.

De Leon had also said the Treasury may offer “premyo” bonds, which gave holders entries to win cash and non-cash prizes during quarterly raffle draws, in January.

For 2022, the government had programmed to raise locally, through the issuance of treasury bills and bonds, P1.91 trillion or 77 percent of the P2.47-trillion total gross borrowings.

De Leon had 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.”

The Philippines borrows the bulk of its financing requirement from domestic creditors to temper foreign exchange risks, while taking advantage of flushing liquidity in the financial system.

This month, the Treasury slashed the weekly T-bill offering to P10 billion and of bonds to P20 billion ahead of the Christmas holidays and as the government wanted to keep the debt-to-gross domestic product (GDP) ratio below 60 percent by yearend.

Since the national government’s outstanding debt climbed by a faster 27.2 percent year-on-year than the 4.9-percent average economic growth from January to September, debt-to-GDP jumped to a 16-year high of 63.1 percent.

As such, the end-September debt-to-GDP was higher than the 60-percent threshold considered by credit rating agencies as manageable for emerging markets like the Philippines.

The government targeted to end 2021 with a debt ratio of 59.1 percent, which will still be the highest since the 65.7 percent posted in 2005.

TSB