Gov’t to borrow PHP225B from local market in August

The national government plans to borrow PHP 225 billion from the domestic market in August, the Bureau of the Treasury (BTr) said on Monday.

The August borrowing plan is 25% higher than the PHP 180-billion program for July.

So far, the government has raised PHP 122.22 billion this month, with another Treasury bill (T-bill) auction scheduled today (July 25) and a Treasury bond (T-bond) auction scheduled for Wednesday (July 26).

The auctions this week were rescheduled as work at government offices in Metro Manila was suspended on Monday due to the transport strike and Typhoon Egay.

The government plans to borrow PHP 75 billion via T-bills, and PHP 150 billion through T-bonds in August.

The government will offer PHP 5 billion worth of 91-day, 182-day, and 364-day T-bills on July 31, August 7, 14, 22, and 29.

The auction on Aug. 21 (Ninoy Aquino Day) was moved to the next day since it is a nonworking holiday.

For the long-term tenors, the BTr will auction off PHP 30 billion in five-year T-bonds on Aug. 1, and PHP 30 billion in six-year T-bonds on Aug. 8.

It also will offer P30 billion in 10-year debt on August 15, PHP 30 billion in 15-year notes on August 23 and PHP 30 billion in five-year bonds on August 30.

The Treasury auctions were moved to August 29 and August 30 since National Heroes Day holiday falls on August 28.

“That is higher (borrowing plan) versus the target of PHP 180 billion in July 2023 is in view of larger maturities of government bonds in August 2023,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He said some of the maturing government bonds might be reinvested in the markets, supporting “any downward correction” in local bond yields.

“The government bond maturities would also support higher demand for the upcoming Treasury bill and Treasury bond auctions, which would lead to further easing of the upcoming auction yields for the month,” he added.

China Banking Corp. Chief Economist Domini S. Velasquez noted that because interest rates are going down, “this is an opportune time for BTr to lock in lower rates compared with one to two months ago.”

“Despite an expected hike by the Fed this week, we expect domestic inflation to trend downwards, along with inflation rates. With rates expected to come down, we think investors will be taking advantage of rates this month,” she said in a Viber message.

Mr. Ricafort said easing inflation would also support the lower rates for the upcoming auctions.

Headline inflation eased for a fifth straight month to a 14-month low of 5.4% in June from 6.1% both in May 2023 and June 2022.

The Philippine Statistics Authority will release the consumer price index for July on Aug. 4.

The government’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 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