Philip­pines to boost debt sales af­ter rate cut: Trea­surer

The Pak Banker - - COMPANIES/BOSS -

The Philip­pines will prob­a­bly in­crease domestic debt sales next quar­ter to take ad­van­tage of liq­uid­ity that may fur­ther ex­pand af­ter cen­tral bank re­duced bor­row­ing costs last week, Trea­surer Ros­alia de Leon said.

The Trea­sury plans to boost debt auc­tions to 50 bil­lion pe­sos ($1.2 bil­lion) per month in the sec­ond quar­ter, de Leon in­di­cated in a March 15 in­ter­view be­fore the re­lease of the bor­row­ing plan. Each auc­tion will prob­a­bly of­fer 30 bil­lion pe­sos of bonds ma­tur­ing in three, five and seven years, and 20 bil­lion pe­sos of bills, she said. Monthly debt sales this quar­ter in­cluded 15 bil­lion pe­sos of bills and 25 bil­lion pe­sos of bonds.

The Philip­pines may shun the global bond mar­ket this year, de Leon said ear­lier this month, end­ing a decade-long run as it takes ad­van­tage of record-low domestic bor­row­ing rates while not adding to cap­i­tal in­flows. Bangko Sen­tral ng Pilip­inas cut the rate on 1.86 tril­lion pe­sos of funds in spe­cial de­posit ac­counts last week and sig­naled it may re­duce this fur­ther to curb gains in the peso, the best per­former of the past 12 months in the re­gion and among emerg­ing mar­kets.

“There might be a move­ment of funds from the SDA to the auc­tion,” de Leon said. “We’re still see­ing over­sub­scrip­tion in auc­tions so yields won’t nec­es­sar­ily go up even if we in­crease the vol­ume.”

The coun­try plans to bor­row 730 bil­lion pe­sos this year. Debt sales this quar­ter to­taled 120 bil­lion pe­sos. The Trea­sury will keep the auc­tion sched­ule at once per month for both bills and bonds next quar­ter, de Leon said.

The yield on the 7.25 per cent bond due Fe­bru­ary 2020 fell to 3.18 per cent on March 14, the same day BSP cut the SDA rate, based on mid­day fix­ing prices at Philip­pine Deal­ing & Ex­change Corp.

The peso closed lit­tle changed at 40.608 per dol­lar on March 15. It has risen al­most 6 per cent in the past 12 months.

The av­er­age ma­tu­rity of Philip­pine debt has length­ened to 10.4 years from 6.7 years in 2010 af­ter sev­eral bond ex­changes, de Leon said. Debt nar­rowed to 51.4 per cent of gross domestic prod­uct at the end of 2012, from 54.7 per cent in 2008, she said.

“With a com­fort­able ma­tu­rity pro­file, we are in a po­si­tion to fill up the belly of the curve and build a re­li­able yield curve, the ab­sence of which rep­re­sents a bar­rier to com­pa­nies who are in­ter­ested in is­su­ing cor­po­rate debt,” the trea­surer told mem­bers of the Money Mar­ket As­so­ci­a­tion of the Philip­pines on March 15.

Pres­i­dent Benigno Aquino’s ad­min­is­tra­tion is nar­row­ing the bud­get deficit as a pro­por­tion of GDP, ex­tend­ing debt ma­tu­rity and cut­ting for­eign-cur­rency risks in pur­suit of an in­vest­ment- grade credit rat­ing. The $225 bil­lion econ­omy ex­panded at the fastest pace in two years in 2012, sur­pass­ing neigh­bors in South­east Asia, helped by a record-low bench­mark rate and in­fla­tion near the low end of a 3 per cent to 5 per cent tar­get.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.