Government eyes P200 billion in March from domestic debt market

MANILA, Philippines — The government plans to raise P200 billion from the domestic debt market next month as it banks on still favorable interest rates even as inflation remains stubbornly high, keeping the central bank on a hawkish stance.

In a memorandum to all government securities eligible dealers yesterday, the Bureau of the Treasury said it would auction off P15 billion each in T-bills for the four Mondays of March. The other one is set on Feb. 27.

The short-dated T-bills will be offered at P5 billion each with benchmark tenors of 91, 182 and 364 days. Total T-bills to be offered will be P75 billion.

For the long-term debt securities, the Treasury plans to raise P25 billion each in T-bonds for four Tuesdays of March and one on Feb. 28 for a total of P125 billion.

The T-bonds on offer will have maturities of six, 10, 13, 20 and seven years, respectively.

The March borrowing program follows a similar P200-billion target set this month.

However, the February program was upsized to P411.68 billion after the Treasury issued its second offering of retail Treasury bonds (RTBs).

The second RTB yielded a total of P284 billion from a week-long offer.

This month, the Treasury raised P57.68 billion in T-bills and awarded P70 billion in T-bonds.

Interest rates were mixed this February for short and long-term securities.

Earlier this month, yields were on a downward trend, but started to inch up again after the Bangko Sentral ng Pilipinas brought the benchmark overnight reverse repurchase rate to six percent after a 50-basis-point hike.

This has been the highest level since the 7.5 percent rate 16 years ago and effectively surpassed the 25-basis-point increase of the US Federal Reserve.

Further, the BSP jacked up its inflation forecast to 6.1 percent from 4.5 percent for 2023 after the surprise 8.7 percent print in January. This is also above the 5.8 percent average last year.

The Cabinet-level Development Budget Coordination Committee has yet to reconvene to revise the government’s inflation forecast.