NG plans to borrow P585B domestically in Q1

THE NATIONAL Government (NG) plans to borrow P585 billion from the domestic market in the first quarter, the Bureau of the Treasury (BTr) said on Wednesday.

In a notice on its website, the BTr said it seeks to raise P195 billion from the issuance of Treasury bills (T-bills) and P390 billion from Treasury bonds (T-bonds) in the January to March period.

In January alone, the government eyes to borrow P195 billion from the domestic market, more than triple the P60-billion borrowing plan for December. This consists of P75 billion in T-bills and P120 billion in T-bonds.

The short-dated T-bills will be offered at P5 billion each with benchmark tenors of 91, 182, and 364 days. Auctions will be held on Jan. 2, 8, 15, 22, and 29.

For the long-term tenors, the BTr will offer P30 billion in three-year T-bonds on Jan. 3 and P30 billion in five-year T-bonds on Jan. 9

It will auction off P30 billion in seven-year T-bonds on Jan. 16, and P30 billion in 10-year bonds on Jan. 23.

The T-bill auction on Jan. 1 will be moved to Jan. 2, while the T-bond auction for Jan. 2 will be moved to Jan. 3 due to the New Year holiday.

For February, the government plans to borrow P210 billion from the domestic market, 7.69% higher than the January program. This is composed of P60 billion in T-bills and P150 billion in T-bonds.

The BTr will offer P5 billion worth of 91-day, 182-day, and 364-day T-bills on Feb. 5, 12, 19, and 26.

For the long-term tenors, the BTr will offer P30 billion in three-year T-bonds on Jan. 30 and P30 billion in five-year T-bonds on Feb. 6.

It will auction off P30 billion in seven-year T-bonds on Feb. 13, P30 billion in 10-year bonds on Feb. 20, and P30 billion in P20-year T-bonds on Feb. 27.

In March, the BTr seeks to raise P180 billion from the domestic market in March via P60 billion in T-bills and P120 billion in T-bonds. This is 14.29% lower than the borrowing plan for February.

It plans to raise P5 billion each from the offer of 91-day, 182-day, and 364-day T-bills on March 4, 11, 18, and 25.

It is seeking to generate P30 billion each from three-year T-bonds on March 5, five-year T-bonds on March 12, seven-year T-bonds on March 19, and 10-year bonds on March 26.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message the P585-billion borrowing plan for the first quarter was “just right.”

“We continue to expect the market to ask for premium on debt instruments as BTr plans to borrow more in 2024 than this year, which means that there will be more debt supply. Plus, a clear-as-day dovish BSP may put pressure on yields to decline as inflation gets tamed and key interest rates are actually cut,” Mr. Asuncion said.

“Thus, banks and other financial institutions may start lending out more rather than parking their resources on government debt instruments.”

The government’s borrowing program for next year is set at P2.46 trillion, of which P1.85 trillion is from domestic sources.

“Timing is favorable amid lower long-term interest rates/bond yields recently that would reduce the borrowing cost of the government,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“It is also a sweet spot, not just for the government and other borrowers, but also to investors or buyers of government securities as they will still earn relatively higher interest rate income, with potential for investment gains if yields go down further and would lead to more trading gains from an investment perspective,” he added. — A.M.C. Sy