Treasury hikes July borrowing program

THE BUREAU of the Treasury (BTr) raised its planned borrowings from the local market to P235 billion in July, as it seeks to offer longer tenors amid strong demand and a low-rate environment.

In a memorandum posted on its website on Tuesday, the BTr said it is planning to borrow P60 billion via the Treasury bills (T-bills) and another P175 billion in Treasury bonds (T-bonds).

This is 9.3% higher than the P215-billion borrowing plan in June, which consists of P75 billion in T-bills and P140 billion in T-bonds.

“Given June bid to cover, we see strong market liquidity and demand to put money to work,” National Treasurer Rosalia V. de Leon told reporters via Viber on Tuesday.

For next month, the BTr will offer P5 billion each via the 91-, 182-, and 364-day T-bills every Monday.

It will also hold weekly auctions for the T-bonds again every Tuesday at P35 billion each next month. It will offer 11-year bonds on June 29; seven-year papers on July 6 and July 27; 20-year notes on July 13 and 10-year securities on July 20.

Excluding the scheduled T-bill auction next week and the result of the tap facility on Tuesday, the government has raised P242 billion so far this month, bigger than the programmed P215 billion.

It borrowed P80 billion via the T-bills after upsizing the volume of debt papers it accepted in all four auctions, and another P162 billion in T-bonds as it opened the tap facility for the bonds every week.

A bond trader said the bigger July borrowing program fell within market expectations after the past auctions this month showed that players can absorb longer tenors amid robust liquidity and the sustained risk aversion of investors.

“The BTr now tries to borrow longer to extend its maturity profile while it still can, [while the market is] trying to extend as well because they need to earn margins,” the trader said via Viber.

The Treasury planned to issue more T-bonds to take advantage of low rates before the yields increase once the economy’s recovery picks up, the trader said.

The government aims to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit that is expected to hit 9.3% of economic output. — Beatrice M. Laforga