Government to borrow P140 billion from domestic market

MANILA, Philippines — The national government is eyeing to raise P140 billion next month through the issuance of securities in the domestic market, the Bureau of the Treasury (BTr) said yesterday.

In a memorandum posted on its website, the BTr said it is scheduled to offer P80 billion worth of Treasury bills (T-bills) and P60 billion worth of Treasury bonds (T-bonds) in February.

With a sum of P140 billion, the government’s domestic borrowing program for next month remained unchanged from the volume set for January 2020.

National Treasurer Rosalia de Leon said that while the volume was the same, some securities to be floated next month have longer maturities.

This is to cater to investors who are looking for higher yields amid a low interest rate environment.

“There are very low yields and investors may have appetite for yield pick-up,” she said.

For next month, the BTr is set to continue its weekly auction of T- bills with a total volume of P20 billion every Monday.

Each auction will consist of P5 billion worth of 91-day, P5 billion worth of 182-day and P10 billion worth of 364-day debt papers.

The BTr said P30 billion worth of securities maturing in three years would also be offered on Feb. 2, while another P30 billion worth of 10-year securities would be sold on Feb. 16. For January, the longest tenor offered was only seven years.

The government is ramping up its borrowings to plug the deficit in its budget, which is now expected to widen to 8.9 percent of this year’s gross domestic product (GDP).

For 2021, the BTr is programmed to borrow P3.03 trillion, which is slightly higher than last year’s target of  P3 trillion.

Budget documents showed that P2.58 trillion of this amount will come from domestic lenders, while P442.36 billion will be sourced from foreign creditors.

Given its ramped up borrowing activities, the Philippines’ outstanding debt is seen to hit P11.98 trillion by the end of 2021, translating to a debt-to-GDP ratio of 58.1 percent.

As of end-November 2020, the debt pile has already reached P10.13 trillion, 1.1 percent higher than the P10.03 trillion recorded in October.

Since the start of 2020, the national government’s debt stock ballooned by P2.4 trillion or 31.1 percent due to higher funding requirements for COVID-19 response and recovery measures.