Gov’t plans to borrow more in third quarter

THE GOVERNMENT plans to borrow up to P195 billion locally in the next three months, up from this quarter’s P180-billion program and July- September 2016’s planned P135 billion, involving some shorter-term debt to help fund infrastructure projects.

In a memorandum on its Web site, the Treasury bureau said it will offer as much as P105 billion worth of Treasury bills (T-bills) and P90 billion worth of Treasury bonds ( T- bonds) between July and September.

The government will offer a total of up to P42 billion in 91day T-bills, P35 billion in 182-day papers and P28 billion in 364day notes in seven auctions next quarter — on July 5 and 19; Aug. 2, 16 and 30; and on Sept. 13 and 27 — more than what was programmed in 2017’s second quarter.

Planned T- bond sales next quarter, meanwhile, will consist of one offer each of five- and 20year securities on July 13 and 27, respectively; as well as two offers each of seven-year (on Aug. 10 and Sept. 7) and 10-year (on Aug. 24 and 21) papers. The size for each offer is P15 billion.

T-bonds on offer next quarter will not include the three-year tenor that was offered in the January-March period.

The government raised P154.82 billion from its sale of state securities this quarter, below its original plan to borrow up to P180 billion. Broken down, P90 billion were sourced from T-bills and P64.82 billion from T-bonds. The second- quarter program capped offers of both papers at P90 billion each.

It secured P150.602 billion from the sale of government debt in the first quarter, lower than a P180- billion program for those three months.

National Treasurer Rosalia V. De Leon said they continue to offer more volume for longer-dated T-bonds.

“So we are building up the volume of those bonds, so basically we will be reissuing along those tenors also,” she told reporters after the 20-year T-bonds auction on Tuesday.

Sought for comment, a bond trader said in a phone interview that total volume for both T-bills and T-bonds on offer in the third quarter was increased to help fund the government’s planned infrastructure projects.

“There are a lot of projects in the pipeline that need to be funded, most of which are government infrastructure projects,” the

trader said. “With the view that spending would go up, at the same time, investor demand would be more on the shorter(-term debt); that’s why the government added the five-year securities because banks need to lock in their cash should borrowings go up with the infrastructure thrust on the pipeline.”

For 2017, President Rodrigo R. Duterte’s administration set a P3.35 trillion budget, earmarking P860.7 billion for infrastructure, which is equivalent to 5.4% of gross domestic product, against the P756.4 billion programmed in 2016.

“So it’s really more of the government needs to cover their funding of projects,” the trader added.

For 2017, the state plans to borrow P727.64 billion, bulk of which or 80% will come from T-bills and T-bonds worth a total of P582.112 billion while 20%, amounting to P145.528 billion, will be sourced from foreign creditors. —