Gov’t sets PHP 185-billion borrowing plan for June

THE NATIONAL GOVERNMENT plans to borrow PHP 185 billion from the domestic market in June, the Bureau of the Treasury (BTr) said on Wednesday.

The BTr released its borrowing plan for next month which is 5.71% higher than the PHP 175-billion program for May.

So far this month, the government has raised P148.005 billion, with another Treasury bill (T-bill) auction scheduled on Monday (May 29).

The BTr plans to borrow PHP 60 billion in T-bills and PHP 125 billion in Treasury bonds (T-bonds) in June.

Broken down, the government will offer PHP 5 billion worth of 91-day, 182-day, and 364-day T-bills on June 5, 13, 19, and 26.

For the long-term tenors, the BTr will auction off PHP 25 billion in nine-year T-bonds on May 30, and PHP 25 billion in five-year T-bonds on June 6.

It will offer PHP 25 billion in 15-year debt papers on June 14, PHP 25 billion in six-year bonds on June 20, and another PHP 25 billion in nine-year papers on June 27.

Since June 12 (Monday) is the Independence Day holiday, the T-bill auction will be moved to June 13 (Tuesday), while the T-bond auction scheduled for June 13 will be moved to June 14 (Wednesday).

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the higher government securities issuance in June is partly due to the increase in T-bond maturities in June.

“In view of expected pause in Fed rates and local policy rates in June 2023 and a possible cut in banks’ reserve requirement ratio (RRR) during the month, long-term T-bond auction yields could still continue to go down,” he said in a Viber message.

Market players are still divided on whether the US central bank will raise rates or pause its tightening cycle at the June 13-14 policy meeting.

However, Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla has already signaled a long pause on interest rates, as inflation continues to ease.

This after the Monetary Board kept its benchmark interest rate unchanged at 6.25% at its May 18 meeting. Its next policy-setting meeting is on June 22.

Mr. Medalla also hinted at a possible reduction in banks’ reserve ratios next month as an alternative to cutting its policy rate.

The RRR for big banks is currently at 12%, while the ratios for thrift and rural lenders are at 3% and 2%, respectively.

On the other hand, Mr. Ricafort noted that T-bill yields could remain elevated amid a pause in key rates here and in the United States.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa noted in a Viber message that the BTr increased its borrowing plan to take advantage of the recent decline in interest rates.

“We could see rates face downward pressure as inflation expectations ease,” Mr. Mapa added.

Mr. Mapa also said T-bond rates may be affected by sentiment driven by uncertainty over the US debt ceiling talks.

Meanwhile, a trader said in an e-mail that the weekly volume for the auctions was the same, the only difference was that June had an extra week.

The trader likewise noted that the rates of T-bills and T-bonds could fall due to the easing inflation outlook and a possible pause in the BSP’s tightening cycle.

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. — AMCS