Government set to borrow P120 billion

MANILA, Philippines — The government is planning to borrow P120 billion from the domestic market next month through the regular issuance of securities, the Bureau of the Treasury (BTr) announced yesterday.

In an advisory posted on the BTr’s website, National Treasurer Rosalia de Leon said the government is planning to offer P60 billion in Treasury bills (T-bills) and P60 billion in Treasury bonds (T-bonds) in the last month of the year.

With a total volume of P120 billion, the government’s domestic borrowing program for December is slightly lower than the P140 billion target in November.

This is, however, three times larger than the P40 billion borrowing program set by the Treasury in December last year.

The BTr said it is scheduled to sell T-bills on Dec. 1, 7 and 14, with a total volume of P20 billion for every auction. Each batch will consist of P5 billion worth of 91-day, P5 billion worth of 182-day, and P10 billion worth of 364-day debt papers.

In addition, P30 billion in three-year T-bonds will be auctioned on Dec. 2, while another P30 billion worth of seven-year securities will be sold on Dec. 15.

De Leon said that these will come from reissued series, with the bonds having a total remaining life span of three to four years.

Aside from its regular auctions, the BTr is also offering the second tranche of its Premyo Bonds. The fund raising activity will run until Dec. 11.

The Premyo bond offering has a tenor of one-year, priced at an interest rate of 1.25 percent per annum. The BTr is targeting to raise at least P3 billion from the issuance.

The program also has a switch tender component, which means holders of Premyo Bonds due on Dec. 18, 2020 may opt to exchange their debt papers for the new securities.

De Leon said the reception for the bond sale has been “good so far.”

The government is ramping up its borrowings to plug the deficit in its budget, which is now expected to widen to P1.82 trillion or 9.6 percent of gross domestic product (GDP) due to weak revenue generation and higher spending requirements amid the pandemic.

For 2020, the Philippines is programmed to borrow P3 trillion, the bulk or P2.22 trillion of which will come from domestic sources.

As of end-September, the national government’s outstanding debt settled at P9.37 trillion as of end-September, down by P246.15 billion or 2.6 percent from a record-high of P9.62 trillion last August.