₧15B in T-bills awarded; rates moved sideways

THE Bureau of the Treasury once again fully awarded P15 billion in Treasury Bills (Tbills) on Monday. Average rates moved sideways and were all lower than the secondary benchmark rates.

Nonetheless, the auction was more than thrice oversubscribed, with total bids for the debt papers amounting to P55.2 billion.

The Treasury did not immediately respond to queries following the auction. But, according to a bond trader, the rates moved sideways because the demand and supply did not change, adding that the current levels are still aligned against the curve.

The 91-day T-bill’s average rate was unchanged at 1.077 percent. The tenor attracted total tenders of P15.58 billion, more than triple the P5-billion offer.

Unlike the 91-day T-bills, the 182day tenor’s average rate fell to 1.405 percent, down by 0.3 basis points from the previous auction’s 1.408 percent. Investors’ bids for the security hit P22.65 billion, more than four times the P5-billion offer.

Lastly, the 364-day T-bills fetched a slightly higher average rate at 1.616 percent, a 0.4-basis point rise from 1.612 percent in the last auction. Bids for the debt paper reached P16.96 billion, more than thrice the P5-billion offering.

For this month, the Treasur y 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 Treasury 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, of which around 75 percent 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.

Meanwhile, 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 P11.61 trillion, swelling by 26.7 percent from P9.16 trillion a year ago.

As a percentage of GDP, the debtto-gdp ratio this year is projected to further rise to 59.1 percent and peak next year at 60.8 percent—slightly above the internationally accepted threshold—before gradually tapering off to 60.7 percent and 59.7 percent in 2023 and 2024.

Prior to the pandemic, the government notched a record-low debt-togdp ratio of 39.6 percent in 2019.

The Department of Finance sees the national government returning to its pre-pandemic debt and budget deficit levels as early as 2024 or by 2025 if the recommended fiscal measures are passed early by the next administration and if the economy quickly recovers.