Treasury to issue additional P15-B 7-year bonds

MANILA, Philippines — The Bureau of the Treasury (BTr) is set to issue an additional P15 billion worth of seven-year Treasury bonds (T-bonds) this week to plug past rejections made by the auction committee and beef up the state coffers.

In an advisory posted on its website, the BTr said it is set to conduct a supplementary auction for government bonds with remaining life span of six years and three months tomorrow.

National Treasurer Rosalia De Leon said the securities would still be part of the government’s borrowing program this year, since they will offset past rejections made by the BTr in earlier auctions.

“It is still for 2018 financing since this will plug for rejections in previous auctions,” De Leon said.

Based on the original fourth quarter borrowing program of the government, the Treasury was supposed to issue its last seven-year T-bond offering for the year last Dec. 4.

However, the BTr rescheduled its auctions and issued the securities in advance last Nov. 27.

The average rate fetched by the securities back then declined by 11.1 basis points to 6.974 percent from 7.085 percent, as investors started to flock to long-term debt instruments while interest rates are still high.

De Leon earlier said interest rates may already be starting on theirs downward trend due to easing inflation.

The BTr also auctioned off in advance reissued 10-year T-bonds last Dec. 11, which were supposed to be the government’s last T-bonds auction for the year.

The government borrows from both local and foreign creditors to finance its budget deficit, which is currently targeted at three percent of the gross domestic product (GDP).

In the first nine months, the national government’s gross borrowings reached P683.28 billion, 9.5 percent higher than the P623.78 billion recorded in the same period last year. Of this amount, P399 billion was sourced from domestic lenders.  About P154.42 billion of the total domestic debt came in the form of Treasury bonds. This was 22.7 percent lower than the P199.82 billion registered in the same period a year ago due to many unsuccessful auctions earlier this year.

Meanwhile, the national government’s outstanding debt as of end-September settled at P7.159 trillion, equivalent to 42.3 percent of the country’s GDP.

For this year, the national government is programmed to borrow P986 billion from local and foreign lenders.

This is comprised of P640 billion in domestic borrowings and P346 billion in external credit.