BTr sets domestic borrowing program in Dec at only ₧70B


By Bernadette D. Nicolas  @BNicolasBM

THE Bureau of the Treasury has set a significantly smaller domestic borrowing program for December at only P70 billion, lower than what it used to borrow in the previous months.

Broken down, the Treasury is set to borrow from the local debt market a total of P30 billion through Treasury Bills (T-bills) and P40 billion via Treasury Bonds (T-bonds).

In November, the Treasury programmed to borrow P200 billion by offering P140 billion in T-bonds and P60 billion in T-bills.

National Treasurer Rosalia V. De Leon explained their decision to go with a smaller borrowing program for December by noting that they have already taken advantage of the strong demand for Retail Treasury Bonds (RTBs) and because there are fewer auction days given the holidays.

The public offer period for 5.5-year RTBs with a gross interest rate of 4.625 percent per annum is scheduled to last until today, November 26.

“Given that we have been seeing strong demand for our ongoing RTB 26 issuance, we have the room to scale down our December auction sizes, especially the T-Bills as this will allow us to lengthen our domestic average residual maturity,” De Leon told reporters in a message.

Moreover, De Leon said the reduction in the December borrowing program will enable them to ensure that the government can stay within its annual borrowing program and maintain the country’s debt-to-GDP ratio “at “sustainable levels.”

For 2020, the national government programmed to borrow a total of P3.1-trillion, mostly to be raised through domestic sources.

As of the end of the third quarter, the country’s debt as a percentage of GDP has climbed to 63.1 percent due to the unexpected costs of the pandemic and lower revenue collection given the lockdowns.

The internationally acceptable debt-to-GDP ratio threshold for emerging markets is at 60 percent.

Earlier this year, the Department of Finance projected the country’s debt-to-GDP ratio to settle at 59.1 percent by yearend and peak at 60.8 percent by 2022 before tapering down to 60.7 percent in 2023 and 59.7 percent in 2024.

Based on its schedule of offerings for December, the Treasury will be auctioning off P10 billion in 91-day, 182-day, and 364-day T-bills in each of the three weekly auction days on Mondays, particularly in November 29, December 6, and December 13.

Apart from T-bills, it will also sell P20 billion in 10-year T-bonds on December 7 and another P20 billion in 7-year T-bonds on December 14. The government borrows to meet its spending requirements as well as to finance its budget deficit.

The Treasury also reported on Thursday that the national government’s cumulative budget deficit from January to October widened to P1.2 trillion, higher by 27.94 percent than P940.6 billion in 2020. The wider gap resulted from government expenditures overtaking state revenues.

As of end-August this year, the national government’s outstanding debt hit a new record-high of P11.64 trillion, up by more than a fifth from P9.62 trillion a year ago. It is expected to reach P11.73 trillion by the end of this year and P13.42 trillion by end-2022.

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