THE Bureau of the Treasury said it plans to borrow P10-billion more in April at P170 billion, higher than the P160 billion it programmed in March, to take “advantage of good liquidity conditions.”
The tweak upward was announced by National Treasurer Rosalia V. De Leon on Monday as a way to explain the schedule of government securities offering it released that day.
To raise P170 billion in April, the Treasury will be auctioning off P100 billion in Treasury Bills (T-bills) and P70 billion in Treasury Bonds (T-bonds).
The Treasury said it will be offering P25 billion in T-bills in each of the four auction days of the month; the amount bigger than the usual program of P20 billion in the previous months.
Likewise, the P70 billion T-bonds offering for April was also higher than the P60-billion programmed for the debt papers in the past months.
In each of the four Mondays of April, the Treasury is set to offer 91-day, 182-day and 364-day T-bills.
On the other hand, it will be offering P35-billion in 5-year T-bonds on April 6 and another P35 billion in 7-year T-bonds on April 20.
On Monday the Treasury awarded P24 billion in T-Bills, an upsize from the P20 billion initial offer.
Broken down, the Treasury awarded P7 billion each for the 91-day and the 182-day T-bills and P10 billion for 364-day T-bills.
The auction was also oversubscribed by almost four times the initial offering as the tenors attracted total bids of P79.3 billion. This prompted the auction committee to raise the accepted non-competitive bids for 91-day and 182-day securities to P4 billion each.
Rates moderating
UNLIKE the past weeks, the T-bills’ average rates for all tenors were all down compared to the previous auction.
De Leon said they “see rates moderating as investors again flock to safe-haven assets” and that “sufficient liquidity remains.”
Pressed on whether investors are shrugging off elevated inflation and the re-imposition of enhanced community quarantine restrictions, De Leon said: “As BSP (Bangko Sentral ng Pilipinas) clarified, higher inflation is transitory, coming from supply-side constraints, which non-monetary measures will address.”
De Leon also said they opened the tap facility auction on Monday for an additional P5-billion for 364-day T-bills.
The 91-day T-bills capped at an average rate of 1.269 percent, sliding by 6.7 basis points from the previous auction’s 1.336 percent. Total bids for the tenor amounted to P22.357 billion, more than quadruple the P5 billion initial offer.
Meanwhile, the 182-day T-bills fetched a lower average rate of 1.609 percent, a 10.9-basis point (bps) drop from 1.718 percent in the past auction. Tenders for the security reached P21.507 billion, also four times the initial offer of P5-billion.
Lastly, the average rate for 364-day T-bills fell by 7.1 bps to 1.926 percent from 1.997 percent previously.
Moody’s views
THE Treasury’s announcement came on the day Moody’s Investor Services flagged the rising Covid-19 infection rate to delay economic recovery; “a credit negative.”
Moody’s Investor Services also noted that the “tightened restrictions on households and businesses have prompted calls for another stimulus package while the weak economy weighs on taxable income.”
“At the same time, the recently passed Corporate Recovery and Tax Incentives for Enterprises (Create) Act may worsen near-term weakness in tax revenue,” the credit rating agency said. “Although the Create Act introduces limits to tax incentives that will expand the tax base over the long run, policymakers saw this measure as facilitating the recovery from Covid in part by lowering corporate income tax rates.”
Last year, the agency said, national government debt rose sharply to 54.5 percent of GDP [gross domestic product] from 39.6 percent the previous year, “effectively reversing the progress on debt consolidation over the past decade.”
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