2022 opening salvo: P15B in new debts through T-bills

National Treasurer Rosalia de Leon / INQUIRER FILE PHOTO

MANILA, Philippines—The Bureau of the Treasury raised P15 billion from its first auction in 2022, borrowing through short-dated T-bills at rates which fell across-the-board on expectations of easing inflation.

The Treasury sold P5 billion each in the benchmark 91-, 182-, and 364-day IOUs.

The average rate for the three-month debt paper declined to 1.075 percent from 1.125 percent previously.

The Treasury awarded the six-month securities at 1.269 percent, down from 1.428 percent last month.

One-year treasury bills fetched an annual rate of 1.6 percent, down from 1.649 percent.

Bids across the three T-bill tenors totaled P71.1 billion, making the auction nearly five times oversubscribed.

“We made a full award on all tenors, with rates dropping as inflation for December 2021 is expected at 3.9 percent primarily due to the implementation of oil price rollbacks,” National Treasurer Rosalia de Leon said, referring to economists’ consensus forecast on last month’s headline inflation.

University of Asia and the Pacific (UA&P) economist Victor Abola, for instance, projected the rate of increase in prices of basic commodities last month at a lower and within-target 3.7 percent year-on-year, from 4.2 percent last November.

“The upside comes from possible inadequate food supply to meet the seasonal, and pent-up demand,” Abola said in an e-mail last week.

“The downside comes from the sharp fall in fuel prices, especially considering that local petroleum companies adjust pump prices around two weeks after crude oil price movements in international markets,” Abola said.

While headline inflation likely ended 2021 above the Bangko Sentral ng Pilipinas’ (BSP) 2 to 4 percent target band of manageable price hikes conducive to economic growth, the rate was expected to return to within the same target range this year owing to high base effects, especially of oil prices.

De Leon said the Treasury’s weekly T-bill and bond auctions will continue to be conducted online, especially as Metro Manila on Monday reverted to stricter alert level 3 restrictions, no thanks to increasing COVID-19 infections following the Christmas holiday celebrations. “Maybe we can transition to physical auctions under alert level 1,” De Leon said, referring to the least stringent quarantine level.

The Treasury had programmed to borrow P200 billion from the domestic debt market this month. For 2022, the government will raise locally P1.91 trillion, or 77 percent of the P2.47-trillion total gross borrowings.

Debt-to-gross domestic product (GDP) was expected to further rise to 60.8 percent by end of 2022 from the programmed 59.1 percent in 2021, while the next administration was expected to jump-start fiscal consolidation to narrow the pandemic-induced wider deficit and repay ballooning obligations.

Separately, the Department of Finance (DOF) said in a statement on Monday that the bond-trading platform Philippine Dealing System Holdings Corp. (PDS Group) plans to launch the first-ever digital corporate bonds in the Philippines next month.

“The PDS is aiming to conduct an end-to-end test of the digital registry and depository with market participants by January this year, and is targeting its possible live launch with an issuance of a digital bond by late February,” the DOF said, quoting Philippine Dealing and Exchange Corp. (PDEx) president and chief executive Antonino Nakpil as recently telling the Capital Market Development Council, co-chaired by Finance Secretary Carlos Dominguez III.

“The proposed digitalization roadmap for the corporate bond market includes the use of distributed ledger technology (DLT) for the registry and depository, which complements and links with the electronic securities issue portal (e-SIP),” the DOF said.

“The e-SIP already allows the online submission of documents required for PDEx listing and Philippine Depository and Trust Corp. (PDTC) registry services and facilities for issuers and underwriter-selling agents in their initial public offerings (IPOs) for corporate bonds,” the DOF added.

TSB