Gov’t to borrow P150B from domestic market in Oct.

The National Government (NG) plans to borrow PHP 150 billion from the domestic market in October, the Bureau of the Treasury (BTr) said on Thursday.

The October borrowing plan is 16.67% lower than the PHP 180-billion program for September, but higher than the actual PHP 121.064 billion raised by the government this month.

The government plans to borrow PHP 60 billion from T-bills and PHP 120 billion via T-bonds in September, the BTr said.

Broken down, the government will offer PHP 5 billion each in 91-day, 182-day, and 364-day T-bills on Oct. 2, 9, 16, and 23.

For the long-term tenors, the BTr will offer PHP 30 billion in five-year T-bonds on Oct. 10 and PHP 30 billion in seven-year bonds on Oct. 17.

It will also auction off PHP 30 billion in 10-year T-bonds on Oct. 24.

The lower borrowing plan for October could have been due to the lower amount of government bond maturities during the month versus September and August, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Meanwhile, rates for the T-bills and bonds to be offered next month could be steady due to elevated US Treasury yields recently, he added.

“Excess liquidity in the financial system could still support demand for government securities, but could be offset by [the] lower amount of maturing government bonds in October/4Q 2023,” he said.

The BTr set a lower October borrowing plan likely to give way to its retail dollar bond (RDB) issuance, China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

The government raised an initial USD 611.2 million (PHP 34.8 billion) at the rate-setting auction of its second onshore RDBs on Wednesday, more than three times the minimum issue size of USD 200 million.

The five-and-a-half-year bonds fetched a coupon rate of 5.75%.

The BTr could potentially raise more than USD 1 billion via the RDBs as investors view it as an alternative to local government securities, Mr. Ricafort said.

Hawkish signals from the Philippine central bank and inflation likely remaining above 5% this month could also contribute to elevated returns for the government securities, Ms. Velasquez added.

BSP Governor Eli M. Remolona, Jr. told Bloomberg on Monday that he is open to an off-cycle rate hike before their Nov. 18 meeting and ruled out cuts in the near term.

The central bank kept its benchmark rate unchanged for a fourth straight meeting at 6.25% last week.

However, officials signaled they might resume tightening at their next meeting if inflation pressures persist.

The NG’s 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 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. — A.M.C. Sy