FMIC, UA&P: Govt securities to remain attractive

GOVERNMENT securities will remain attractive after the country secured an “A” investment grade credit rating, according to First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P).

“ROPs should retain its attractiveness as a result of JCR’s (Japan Credit Rating Agency) credit rating upgrade and investors’ quest for higher- yielding but safe assets, even though spreads over US Treasuries may narrow only slightly in the coming months,” FMIC and the UA&P said in their latest

“Market Call” report on Thursday.

ROPs refer to medium- or longterm dollar-denominated bonds directly issued by the Philippines.

The report comes after JCR upgraded in June the country’s “BBB+” rating to “A-” with a “stable” outlook, which indicates that the rating would be maintained over the near term.

JCR recognized the country’s manageable external debt balance — kept low at 22.2 percent of gross domestic product as of end-2019 — and robust foreign currency reserves.

FMIC and the UA&P said total tenders in auctions of government securities for May soared by 42.5 percent to P709.6 billion from P497.9 billion a month ago.

The latest borrowing program of the Bureau of the Treasury showed that the government plans to borrow P205 billion from local sources this month, which would be up 192.8 percent from P70 billion in the same month a year ago, and 20.58 percent bigger than the P170 billion in June.

Of the amount set, the government would generate P145 billion by issuing Treasury bills (T-bills) and the remaining P60 billion by issuing Treasury bonds (T-bonds).

Of the T-bill amount, P25 billion would be raised through the 91- day tenor, P25 billion through the 182-day, P50 billion through the 364-day and P45 billion through the 35-day.

Of the T-bond figure, P30 billion would be borrowed through the seven-year tenor and the rest through the 10-year.