Government to borrow P200B locally in July


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THE NATIONAL Government plans to borrow 200 billion pesos domestic market in July, the Treasury Office (BTr) announced on Tuesday.

The July borrowing plan is 20% lower than its 250 billion peso program for June, when it only managed to raise 151.31 billion pesos in the local market.

The office is expected to hold weekly auctions for 60 billion pesos worth of treasury bills (T-bills). Treasury bond auctions are expected to yield 140 billion pesos.

The Treasury office said it would be off5 billion pesos of Treasury bills at 91, 182 and 364 days on July 4, 11, 18 and 25.

For long-term maturities, the Treasury is expected to raise P35 billion in four-year treasury bills on July 5; 35 billion pesos in seven-year instruments on July 12; 35 billion pesos of 10-year debt on July 19; and in 14-year bonds again on July 26.

The 14-year bond would be offered due to the “lack of longer terms,” ​​National Treasurer Rosalia V. de Leon told reporters in a Viber message.

Bond traders said borrowing for July could have been reduced due to fewer auction dates.

The smaller supply was prompted by the government’s “early loading” ahead of national elections, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in a cellphone message.

The government is also taking steps to improve the situation in the country Ifscal performance by focusing on tax collection as it reopens the economy amid a coronavirus pandemic, he said.

In May, the national government budget deficit narrowed by 26.72% to 146.8 billion pesos compared to the previous year.

Revenues increased by 18.9% from the previous year to P304.9 billion, while expenses fell by 1.1% to P451.7 billion.

“I think the general sentiment is curious, especially with the choice to issue an out-of-run series to start the month, as well as issue a 14-year duration in the week we expect the US Federal Reserve to rise by 75 basis points,” a bond trader said in a Viber message.

At its last meeting in June, the Fed raised the benchmark interest rate by 75 basis points, the highest since 1994, to combat inflationary pressures.

The government is borrowing from local and external sources to help finance a budget deficit capped at more than 7% of gross domestic product for 2022.

The national government has a gross domestic borrowing program of 1,910 billion pesos this year. Of this amount, treasury bills are expected to yield 52 billion pesos, while IfFixed-rate Treasury bonds are estimated to yield 1.86 trillion pesos. — Ana Olivia A. Tirona

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