Outstanding local IOUs climbed to new high of P 8.57T in March

The value of outstanding local debt securities climbed to a new high of P8.57 trillion in March following the issuance of P457.8 billion in retail treasury bonds (RTBs) last month.

The latest Bureau of the Treasury (BTr) data on Friday showed that the face amount of outstanding treasury bills and bonds as of last month further rose from P8.11 trillion on February.

The increase was despite the BTr rejecting bids during its March auctions, which fetched high bid rates as Russia’s invasion of Ukraine made domestic creditors jittery.

The BTr last month awarded only P91.7 billion out of its P250-billion domestic borrowings program. But treasury and finance officials had said the recent RTB proceeds would offset the rejected IOUs to fund the national budget.

Outstanding treasury bonds jumped to P7.91 trillion on March from P7.39 trillion in February. The five-year RTBs with a coupon rate of 4.875 percent a year raised P457.5 billion in new money, plus P259.5-million worth swapped from maturing bonds.

It was the government’s 27th RTB issuance as well as the Duterte administration’s 10th and likely its last before a new president assumes office in mid-2022.

As of March, outstanding RTBs—debt paper being pitched by the government as an “investment” among individuals and groups— reached P3.25 trillion.

On the other hand, outstanding short-dated T-bills again declined to P656.6 billion last month from P719.6 billion a month ago.

Outstanding government securities would further rise as the BTr had programmed to borrow P200 billion — P60 billion in T-bills and P140 billion in bonds — from the domestic debt market this month.

Out of the total P2.2-trillion borrowings programmed by the government for 2022, three-fourths or P1.65 trillion would be sourced locally. The Philippines borrows more domestically to take advantage of excess liquidity in the financial system while tempering foreign exchange risks.

The rest of the P560.6 billion to be borrowed this year would come externally from low-interest official development assistance (ODA) loans extended by bilateral and multilateral lenders, as well as offshore bond issuances.

The Philippines last month raised a total of $2.25 billion from its first foreign commercial borrowing in 2022, including $1 billion through its maiden “green” bonds offering. The BTr had programmed $7 billion in offshore bond issuances this year.