Government to borrow P200 billion from local market in November

MANILA, Philippines — The government plans to borrow another P200 billion from domestic investors next month, but bond traders believe it may fail to raise such an amount due to rising yields.

The Bureau of the Treasury said it would issue P60 billion worth of Treasury bills (T-bills) as well as  P140 billion worth of Treasury bonds (T-bonds) in November.

However, traders said the Treasury may be compelled to reject bids in some of the auctions as investors may demand higher rates due to risks posed by inflation.

They said the government may find the asking prices too high, resulting in a partial award or full rejection especially for   long-term securities.

“It is possible that the Treasury will repeat its October decisions where it made a full rejection on one issuance and a partial award on another. It is also possible that rates will linger beyond the secondary level due to inflation,” a trader told The STAR.

Inflation jumped to 4.8 percent in September  from 2.3 percent in the same period last year.

Inflation averaged 4.5 percent in the nine months to September, breaching the government’s target range of two percent to four percent.

Further, inflation is expected to stay elevated for the rest of 2021 due to price pressures mostly from fuel.