Philippine Daily Inquirer



The government was able to fully borrow its target amount of short-term debt securities during Monday’s sale of Treasury bills (T-bills) despite the higher rates, although it was not the same outcome for the longer-dated Treasury bonds (T-bonds).

Auction results showed the Bureau of the Treasury (BTr) raised P15 billion via T-bills, as planned, after total demand for the offer hit P39.94 billion.

But despite the robust appetite from creditors, the T-bills fetched higher rates for the fourth straight auction.

The BTr said the average rate for the 90-day tenor stood at 5.772 percent, more expensive than the 5.704 percent recorded in the previous auction. The yield for the 181-day T-bill, meanwhile, rose to 5.885 percent, from 5.865 percent previously.

Lastly, local creditors asked for an average rate of 5.983 percent for the 364-day debt notes, higher than the 5.965 percent they sought at the last offering.

However, the auction for T-bonds, which was also held on Monday instead of the regular Tuesday offerings due to the April 9 holiday, yielded a different result.

Lower offer

The BTr downsized its T-bond issuance to P20.6 billion, from the original plan of P30 billion, despite total demand reaching P37.4 billion.

The re-issued debt paper, which have a remaining life of nine years and nine months, fetched an average rate of 6.439 percent, costlier than the 6.227 percent recorded in the previous offering of the same tenor on March 12, 2024.

The rate was also higher than the 6.33 percent quoted for the comparable securities in the secondary market as of April 5.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., attributed the higher yield of both T-bonds and T-bills to the peso’s weakness, which may stoke inflation by bloating the country’s import bill.

“T-bill and 10-year T-bond auction yields also higher after the peso exchange rate hovered among two-month highs at 56.40 levels that could lead to some pick up in import prices and overall inflation,” Ricafort said.

Documents from the budget department showed the Marcos administra­tion is planning to borrow P1.85 trillion onshore in 2024. Of that amount, P672.1 billion will be raised via short-dated Treasury bills while P1.8 trillion will come from weekly auctions of T-bonds.

Those borrowings are needed to help plug a projected budget hole of P1.5 trillion this year, which is equivalent to 5.6 percent of gross domestic product.

Based on latest government forecasts, it is only in 2028 that the budget deficit, as a share of the economy, is expected to fall below 4 percent at 3.7 percent.

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