Treasury lowers borrowing program to P160 billion in April

MANILA, Philippines — The government plans to secure P160 billion in domestic debt next month, even as interest rates are still on an uptrend due to the continued tightening cycle of the central bank.

In a memorandum to all government securities eligible dealers, the Bureau of the Treasury said it would auction off P15 billion each in T-bills for the four Mondays of April.

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 P60 billion.

For the long-term debt securities, the Treasury plans to raise P25 billion each in T-bonds for four Tuesdays of April for a total of P100 billion.

The T-bonds on offer will have maturities of three, nine, 13 and seven years, respectively.

The April borrowing program is 20 percent below the P200 billion set this month.

For March, the Treasury raised P176.731 billion or 88 percent of the intended amount. It raised P51.731 billion in T-bills and awarded P125 billion in T-bonds.

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

Yields were on an upward trend for T-bills and inconsistent for T-bonds as rates are alternately rising and declining on a weekly basis.

Demand for the securities were also on a downtrend as the market is on edge following the consecutive incidents of banking failures abroad.

These include the collapse of Silicon Valley Bank and Signature Bank in the US, as well as the bailout of Credit Suisse in Europe.

Adding to the pressure is the recent decision of the Bangko Sentral ng Pilipinas to deliver a 25-basis-point rate hike, bringing the overnight reverse repurchase rate to a 16-year high of 6.25 percent.

The BSP effectively matched the US Federal Reserve’s rate increase last week.

Nonetheless, the BSP is expected to finally take a pause in May as the government moves to focus on non-monetary measures to address easing, but still persistently high inflation.

Last month, headline inflation slightly eased to 8.6 percent from the 14-year high of 8.7 percent in February.

Given such an inflation print, the BSP lowered its full-year inflation forecast a bit to six percent from 6.1 percent earlier. This is seen easing further to 2.9 percent by 2024.