Government to borrow P200B locally in July

THE NATIONAL Government plans to borrow P200 billion from the domestic market in July, the Bureau of the Treasury (BTr) said on Tuesday.

July’s borrowing plan is 20% lower than its P250-billion program for June, when it only managed to raise P151.31 billion from the local market.

The bureau is expected to hold auctions for P60 billion of Treasury bills (T-bills) weekly. Treasury bond auctions are projected to raise P140 billion.

The Treasury bureau said it would offer P5 billion worth of 91-day, 182-day and 364-day T-bills on July 4, 11, 18 and 25.

For the long-term tenors, the Treasury is expected to raise P35 billion in four-year T-bonds on July 5; P35 billion in seven-year instruments on July 12; P35 billion in 10-year debt on July 19; and in 14-year bonds again on July 26. 

The 14-year bond would be offered due to “lack of longer tenors,” National Treasurer Rosalia V. de Leon told reporters in a Viber message.

Bond traders said the borrowings for July might have been cut due to fewer auction dates.

The smaller offering was brought about by government “front loading” before the national elections, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a mobile phone message.

The government is also taking measures to improve the country’s fiscal performance by focusing on tax collections as it reopens the economy amid a coronavirus pandemic, he said.

In May, the National Government’s budget deficit narrowed by 26.72% to P146.8 billion from a year earlier.

Revenues rose by 18.9% from a year earlier to P304.9 billion, while expenditures fell by 1.1% to P451.7 billion.

“I think the general sentiment is curious especially with the choice to issue an off-the-run series to start the month, as well as to issue a 14-year tenor in the week we expect the US Federal Reserve to hike by 75 basis points,” a bond trader said in a Viber message. 

At its latest meeting in June, the Fed increased the benchmark interest rate by 75 bps, the biggest since 1994, to battle inflationary pressures.

The government borrows from local and external sources to help fund a budget deficit capped at more than 7% of the gross domestic product for 2022.

The National Government has a gross domestic borrowing program of P1.91 trillion this year. Of this amount, T-bills are expected to bring in P52 billion, while the fixed-rate T-bonds are estimated to raise P1.86 trillion. — Ana Olivia A. Tirona