Government to borrow P420 billion via domestic bonds in Q1 2020

MANILA, Philippines — The government is planning to borrow P420 billion from the local debt market through the issuance of domestic securities in the first quarter of 2020, according to the Bureau of the Treasury (BTr).

In an advisory addressed to government securities eligible dealers (GSEDs), National Treasurer Rosalia De Leon said the government is set to float P240 billion worth of Treasury bills (T-bills) and P180 billion worth of Treasury bonds (T-bonds) from January to March next year.

This corresponds to a total borrowing program of P420 billion in the first quarter of 2020, higher than the P360 billion set for the same quarter of 2019, and P220 billion for the current quarter.

Based on the schedule posted by the BTr, auctions for T-bills will be held every Monday of the first quarter starting from Jan. 6 to March 23, 2020.

Each auction will have a total volume of P20 billion, comprised of P6 billion in 91-day securities, P6 billion in 182-day and P8 billion in 364-day T-bills.

Meanwhile, T-bond auctions will be held on Tuesdays of every other week, starting from Jan. 7 to March 17.

Tenor buckets include three years, five years, seven years, and 10 years, each with a total size of P30 billion. This is higher than the P20 billion size for each tenor previously offered by the Treasury. The government, however, removed 20-year bonds from its borrowing program.

The government borrows from both domestic and external lenders to plug the expected deficit in its budget, which is capped at 3.2 percent of the gross domestic product (GDP) annually from 2019 to 2022.

For next year, the government is planning to ramp up its borrowings to P1.4 trillion, 17.6 percent higher than the P1.19 trillion borrowing program for the current year.

De Leon earlier said the borrowing mix for next year is placed at 75:25, with P1.047 trillion sourced locally and P353.2 billion from foreign creditors.

The national treasurer also bared that total offshore commercial borrowings is expected to reach $3.5 billion by next year. She said the Treasury will tap its usual markets, including the dollar, samurai, euro and panda bond markets.

Program loans, project loans and official development assistance are programmed to reach $3 billion for 2020, she said.

Despite the higher borrowing program for next year, De Leon said the country’s debt as a percentage of the gross domestic product is expected to remain steady at 41.4 percent by the end of next year.

As of Oct. 31 2019, the national government’s outstanding debt has reached P7.906 trillion, which is slightly lower than the P7.908 trillion recorded in the previous month.