Government to borrow P215 billion from local market next month

MANILA, Philippines — The government plans to raise P215 billion from the domestic debt market next month, even as rates continue to rise.

In a memorandum to all government securities eligible dealers, the Bureau of the Treasury said it would auction off P15 billion each in Treasury bills for the five Mondays of August for a total of P75 billion.

The short-dated T-bills will be offered at P5 billion each, with benchmark tenors of 91, 182 and 364 days.

For the long-term debt securities, the Treasury plans to raise P35 billion each in T-bonds for the four Tuesdays of August for a total of P140 billion.

The T-bonds on offer will have maturities of 3.5, seven, 10 and 5.5 years, respectively.

The August borrowing program is higher than the P200-billion plan this month.

Of the P200 billion, the Treasury managed to raise P194.81 billion as investors demanded higher yields.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the government may be able to raise its target amount as long-end BVAL yields, which is the standard for securities, start to ease from pre-pandemic highs.

This is in line with the easing of the benchmark 10-year US Treasury yield to two-month lows amid concerns over a possible US recession that also drove global oil and other commodity prices.

“That is also expected amid the need to shift more toward local borrowings and reduce foreign and US dollar borrowings to reduce and better manage foreign exchange risks,” Ricafort said.

However, he warned that more domestic borrowings could lead to some pick-up in local interest rates due to higher demand for funds from the national government that could compete with other borrowers from the private sector.