Gov’t raises P30B; T-bond rates ease

INQUIRER FILE PHOTO

MANILA, Philippines — The government was able to fully borrow its planned amount of long-dated debt securities on Tuesday’s sale of Treasury bonds (T-bonds) after rates fell ahead of the much-awaited US Federal Reserve policy meeting.

Auction results showed the Bureau of the Treasury made full award of P30 billion in reissued T-bonds, which have a remaining life of 19 years and 11 months.

The offer was met with strong demand, with total bids amounting to P60.9 billion, exceeding the size of original offering by two times.

The robust appetite from creditors, in turn, helped the government borrow money at a lower cost. The debt papers fetched an average rate of 6.189 percent, cheaper than the 6.250 percent seen in the previous auction of 20-year T-bonds on Feb. 27.

At the same time, the yield was lower than the 6.320 percent quoted for the same tenor in the secondary market as of March 19.

Cash-awash

Apart from the high demand for the offer, rates for the T-bonds also fell as the financial system remained awash with cash after the government settled P700 billion in Retail T-bonds that matured early this month.

Analysts also said that the market is anticipating the next move by the US Federal Reserve, which is scheduled to meet on March 20 to decide on monetary policy. Already, a flare-up of inflation in the United States in the first two months of 2024 has dashed hopes for an early rate cut.

READ: Gov’t unveils P585-B local borrowing plan for Q1 2024

Documents from the budget department showed that the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. Of that amount, P672.1 billion will be raised from the sale of short-dated Treasury bills while P1.8 trillion will come from weekly auctions of T-bonds.

Those borrowings are needed to help plug a projected budget hole of P1.39 trillion this year, which is equivalent to 5.1 percent of gross domestic product.

Based on latest government forecasts, it is only in 2027 that the budget deficit, as a share of the economy, is expected to return to prepandemic level at 3.2 percent. INQ