Government sets PHP 175B borrowing plan for May

THE NATIONAL GOVERNMENT (NG) plans to borrow PHP 175 billion from the domestic market in May, the Bureau of the Treasury (BTr) said on Wednesday.

The BTr released its borrowing plan for next month that is 9.38% higher than the programmed PHP 160 billion for April.

The government raised PHP 140.922 billion this month, 12% below the program.

Next month, the BTr plans to borrow PHP 75 billion in Treasury bills (T-bills) and P100 billion in Treasury bonds (T-bonds).

The Treasury will offer PHP 5 billion worth of 91-day, 182-day and 364-day T-bills on May 2, 8, 15, 22, and 29.

The T-bill auction will be held on May 2 (Tuesday) since May 1 or Labor Day is a nonworking holiday.

For the long-term tenors, the BTr is looking to raise PHP 25 billion from six-year T-bonds on May 2, and PHP 25 billion from nine-year T-bonds on May 9.

It also seeks to generate PHP 25 billion from 13-year instruments on May 16 and PHP 25 billion in seven-year bonds on May 23.

A trader said in a Viber message it’s too early to tell how rates would move next month.

“But these will probably stay above 6% for these tenors given fundamentals (high inflation and overnight policy rate),” the trader said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message the rates for long-term tenors have gone down since peaking in November 2022, while the short-term debt has increased by 60-80 basis points (bps) since the start of this month.

Next month’s auctions could be affected by an anticipated slowdown in April inflation, which may lead to a possible pause in tightening by the Bangko Sentral ng Pilipinas (BSP), he said.

Headline inflation slowed to 7.6% in March from 8.6% in February, bringing the first-quarter average to 8.3%. This is well above the central bank’s full-year forecast of 6% and the 2-4% target band.

The Philippine Statistics Authority is scheduled to release April inflation data on May 5.

The Monetary Board has raised borrowing costs by 425 bps since May 2022. Its next meeting is scheduled on May 18.

“There would be less maturities of Treasury bonds from May-June 2023 compared with earlier months of 2023,” Mr. Ricafort said.

The gross domestic borrowing program this year is set at PHP 1.654 trillion, composed of PHP 54.1 billion in T-bills and PHP 1.6 trillion in fixed-rate T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 6.1% of the gross domestic product this year. — By A.M.C.Sy