Gov’t to hike volume of short-term securities in 2018

The Bureau of the Treasury (BTr) is planning to increase the issuance of Treasury bills (T-bills) in 2018 to take advantage of the high demand for short-term securities.

Based on BTr data, the agency is programmed to issue a gross total of P500 billion in T-bills in 2018, an increase of 52.75 percent from the programmed P327.33 billion for this year.

Of the amount, P428.04 billion is expected to mature within the year, resulting in a net issuance of P71.96 billion.

The Treasury said it has raised the volume for T-bills as part of domestic liquidity management efforts. This is also driven by the high demand for short end of the curve, it said.

Meanwhile, gross issuance of fixed-rate Treasury bonds in 2018 is likewise programmed to increase 30.47 percent to P639.84 billion from P490.40 billion this year.

This will bring domestic gross borrowings in 2018 to P711.78 billion, which corresponds to 80 percent of the government’s P888.92 billion total borrowing program.

The government is maintaining an 80:20 borrowing ratio, in favor of domestic credit, to lessen the risk of currency mismatch, the BTr said.

According to the Treasury, it has made adjustments in the annual financing program for 2018 to help meet the funding requirements of the government’s Build Build Build program, as well as to ensure proactive management of its debt portfolio.

The frequency of auctions will be maintained on a weekly basis or twice a month for bonds and twice a month for bills.

The agency said tenors and date of auctions would be announced semi-annually to allow market participants to prepare. Announcement of volumes will still be done quarterly.

The government borrows from the local and foreign creditors to pay maturing debt and finance its budget deficit, which is targeted at three percent of the country’s GDP.

As of end-July this year, the government has borrowed P519.97 billion, up 55.67 percent from the P334.03 billion recorded the same period last year.

Meanwhile, outstanding debt as of July 31 stood at P6.39 trillion.