Government issuing more short-term papers

MANILA, Philippines - The government has kept the amount of local borrowings steady in the last three months of the year, but is now leaning toward issuing shorter-dated papers amid expectations interest rates will rise in the US.

A total of P135 billion in Treasury bonds and bills will be floated from October to December, the Bureau of the Treasury announced Friday.

Broken down, P60 billion of T-bills and P75 billion worth of T-bonds will be offered to local investors.

T-bills have payment terms between three and 12 months, while T-bonds have longer terms.

While the amount of issuance was kept, four- and seven-year T-bonds will instead be issued in the fourth quarter.

The government borrows from local and international markets to fund its budget deficit and pay existing debt.

The issuances will come during the period when the US Federal Reserve is expected to raise interest rates a year after it tweaked them from near-zero levels for the first time in nine years.

National Treasurer Roberto Tan has not replied for comment as of press time, but earlier said the Philippines was prepared for the US Fed hike.

“The cost impact will be very manageable,” he said.

While higher US rates may also increase local borrowing costs, Tan said the government’s preference for domestic funding would be an advantage.

The Duterte administration plans to source 80 percent of its borrowings locally while the balance of 20 percent will come from foreign sources.