Government sets P190 billion borrowing program

MANILA, Philippines — The national government plans to raise P190 billion next month through the issuance of government securities in the domestic market, the Bureau of the Treasury (BTr) said yesterday.

In an advisory posted on the BTr’s website, National Treasurer Rosalia de Leon said the government will issue P130 billion worth of Treasury bills and P60 billion worth of Treasury bonds.

The amount is P75 billion higher than the P115 billion domestic issuance programmed in the same month last year.

In a text message to reporters, De Leon said the Treasury has not yet released the full borrowing program for the second quarter of 2020 as there is still a need to monitor developments in relation to the coronavirus disease 2019 (COVID-19) pandemic. The Treasury usually releases its domestic borrowing program quarterly.

“Situation is still fluid. We will monitor developments and assess results of our auctions in April to determine if full issuance program for the second quarter can be released,” she said.

The BTr official also noted that the market’s appetite continues to be on the short end of the curve, with investors preferring to hold on to their cash.

“Cash remains king as markets continue to remain watchful of impact of measures to battle COVID-19,” De Leon said.

Based on the schedule posted by the BTr, P10 billion worth of 91-day, P5 billion worth of 182-day, and P5 billion worth of 364-day T-bills will be auctioned off every Monday starting March 30 to April 27. These securities will be issued two days after the auction date.

The Treasury also decided to float 35-day T-bills amounting to P15 billion, with the settlement date on April 1 and April 22.

According to De Leon, this is not the first time the Treasury has offered 35-day T-bills. She said the agency decided to revive this tenor while the term deposit facility of the Bangko Sentral ng Pilipinas (BSP) is suspended.

“Thirty-five-day bill provides outlet for investors, while at the same time provides funds for our short-term requirements,” she said.

In addition to T-bills, the BTr will also offer one-year and two-year bonds on April 14 and April 28, respectively. Each tenor has a volume of P30 billion. The bonds will be settled two days after the auction.

The Philippine government borrows from both domestic and external lenders to plug the expected deficit in its budget.

Earlier, Finance Secretary Carlos Dominguez said the government is prepared to increase its borrowings to cushion the impact of the coronavirus outbreak.

He said the country’s fiscal deficit level may breach four percent of the gross domestic product this year, higher than the 3.2 percent ceiling, as government revenues are seen to fall, while public spending will remain as programmed.

Meanwhile, Dominguez urged his fellow governors at the Asian Development Bank (ADB) to empower its president, Masatsugu Asakawa, with more discretion in undertaking measures to address the impact of the COVID-19 pandemic.

Dominguez said this would ensure “that timely and decisive action is taken by the bank in fighting the COVID-19 pandemic and the economic fallout that will follow.”

“I therefore call on my fellow Governors to empower our trusted ADB president and the bank’s management to work alongside the governments of developing member-economies in dealing with the crisis in a highly responsive manner,” Dominguez said in a letter sent to the other 67 governors of the ADB.

“A certain degree of discretion ought to be provided to the president on administrative matters, such as allocating the bank’s budget and authority to approve crisis-related programs and projects, within reasonable limits,” he added.