Sold reissued T-bill rates up on expected higher inflation


THE Bureau of the Treasury raised P35 billion in its successful auction last Tuesday of reissued 10-year Treasury Bonds (T-bonds) despite the uptick in rates.

Investors swamped the auction, which ended up nearly twice oversubscribed as total bids for the tenor reached P61.83 billion.

With a remaining life of 9 years and 10 months, the debt paper is set to mature on July 22, 2031. Its coupon rate is at 4 percent.

The T-bonds fetched an average rate of 4.246 percent, jumping by 33.2 basis points from the previous auction’s 3.914 percent.

National Treasurer Rosalia V. De Leon attributed the surge in rates to “renewed inflation concerns” after the country’s inflation print for August surged to a two-year high of 4.9 percent. This is the highest since December 2018 when inflation was at 5.1 percent.

Nonetheless, De Leon said they still decided to open the tap facility for an additional P5 billion offering to government securities eligible dealers-market makers.

For this month, the Treasury is set to borrow a total of P250 billion from the local debt market, higher than the P200 billion program in August.

Broken down, P175 billion will be raised through auctioning off T-bonds while the remaining P75 billion will be generated via the sale of T-bills. This year, the national government programmed to borrow a total of P3.1-trillion, most of which is expected to be raised through domestic sources.

The government borrows to meet its spending requirements as well as to finance its budget deficit.

The economic team sees the national government’s budget deficit this year to reach P1.86 trillion or 9.3 percent of GDP, even higher than the P1.37 trillion or 7.6 percent of GDP in 2020. In 2019, the budget deficit stood at P660.2 billion or 3.4 percent of GDP.

Also, the national government’s outstanding debt this year is also expected to reach by the end of this year to balloon to P11.73 trillion, up by 19.8 percent from P9.795 trillion in 2020. This is also projected to further swell in 2022 to P13.42 trillion.

As of end-July this year, the national government’s outstanding debt has already piled up to a new record-high of P11.61 trillion, swelling by 26.7 percent from P9.16 trillion a year ago.

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