Outstanding debt securities hit P8.77T in June

Outstanding government securities, which contribute the bulk of the country’s debt stock, rose to a new high of P8.77 trillion at the end of the first half of 2022.

With domestic borrowings sustained even at a time of rising interest rates, the face amount of T-bills and bonds issued as of end-June rose from P8.67 trillion in May, data from the Bureau of the Treasury (BTr) showed.

And with local creditors preferring longer tenors during times of uncertainty, as exacerbated by the Russia-Ukraine crisis and the aggressive tightening from central banks worldwide, outstanding fixed-rate treasury bonds further climbed to P8.22 trillion in June from P8.13 trillion a month ago.

Outstanding short-dated treasury bills also increased to P544.2 billion from a month ago’s P536.7 billion.

Higher yields

Outstanding IOUs will again increase this month as the BTr would borrow P200 billion—P60 billion worth of T-bills and P140-billion bonds—from the domestic debt market.

Following the Bangko Sentral ng Pilipinas’ off-cycle move to increase the policy rate by a mammoth 75 basis points to 3.25 percent, the BTr expects government securities eligible dealers to ask for higher yields.

The national government will borrow this year a total of P2.2 trillion, of which 75 percent or P1.65 trillion would be raised through the issuance of BTr debt paper. The Philippines prefers to source bulk of its borrowings locally to take advantage of a liquid financial system and to temper foreign exchange risks.

Record-high P13.4T debt

The rest of the P560.6 billion to be borrowed in 2022 will come from foreign sources, including concessional or low-interest official development assistance loans extended by bilateral and multilateral lenders and commercial fundraising via offshore bond issuances.

The borrowings will also increase the national government’s outstanding debt to a record-high of P13.4 trillion by end-2022. With economic growth projected at a slightly slower 6.5 percent to 7.5 percent from 7 percent to 8 percent previously, the debt-to-gross domestic product (GDP) ratio will end 2022 at 61.8 percent, up from the 16-year-high of 60.5 percent last year.

For the years 2023 to 2028, the Marcos administration plans to raise 80 percent of its annual financing from local creditors. A more ambitious GDP growth target of 6.5 percent to 8 percent yearly would gradually reduce the public debt ratio to 52.5 percent by 2028. INQ