Government to borrow more next month

MANILA, Philippines — The government targets to borrow more from the local debt market at P225 billion next month amid expectation of favorable interest rates here and abroad.

In a memorandum to all government securities eligible dealers released yesterday, the Bureau of the Treasury said it would auction off P15 billion each in T-bills for the four Mondays of August and the last Monday of July.

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 P30 billion each in T-bonds for five Tuesdays of August for a total of P150 billion.

The T-bonds on offer will have maturities of five, six, 10, 15 and five years, respectively.

The August borrowing program is 25 percent above the P180 billion set for this month.

For July, however, the Treasury raised P122.204 billion or 68 percent of the intended amount.

There is still a pending T-bills and T-bonds auction remaining for July, which could increase the total raised amount.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the higher borrowing program for August was due to larger maturities of government bonds next month.

At least P141 billion of 10-year T-bonds will mature by mid-August.

Ricafort said some of the government bond maturities would be reinvested in the markets, which could support any further downward correction in the local bond yields.

“The easing trend in inflation locally and in the US toward inflation targets as early as the latter part of 2023 would eventually support possible cuts in policy rates in the US and locally, especially in 2024,” Ricafort said.

“The stronger peso exchange rate versus the dollar will also support easing of import costs and overall inflation and will reduce the need for local policy rate hikes and will support lower upcoming auction yields,” he said.