BTr to float P240 B in securities in Q1 2018

The national government plans to raise P240 billion in fresh money through the issuance of government securities to domestic lenders in the first quarter of 2018, the Bureau of the Treasury (BTr) announced over the weekend.

In a memorandum addressed to government securities eligible dealers (GSEDs), the BTr said it would offer P120 billion in Treasury bills and P120 billion in Treasury bonds in the first three months of next year.

This is higher than the P200 billion revised borrowing program set by the Treasury in the fourth quarter.

To respond to the higher offering volume, the BTr has maintained the frequency of its auctions at a weekly basis.

According to the memo, T-bills will be auctioned on Jan. 15 and 29, Feb. 12 and 26, and March 12 and 26 with a total volume of P20 billion.

Broken down, P9 billion of this total volume would come in the form of 91-day T-bills, P6 billion in 182-day T-bills and P5 billion in one-year securities.

The BTr has also set five tenors for its T-bonds offering, including three years, five years, seven years, 10 years and 20 years. Bonds of each tenor will be sold at P20 billion each auction.

The three-year T-bonds will be auctioned on Jan. 23, while five-year securities will be floated on March 6. Seven-year debt notes are also set for auction on Feb. 6.

Auction dates for the 10-year bonds are on Jan. 9 and March 20, while the 20-year debt papers will be sold on Feb. 20.

The issuance of the securities will be made two days after the auction date.

Meanwhile, the Treasury also announced it intends to establish liquid securities on the three-year, five-year, seven-year, 10-year, and 20-year tenors for the whole first semester of 2018.

The BTr said it would start announcing of tenors and auction schedule from a quarterly to semi-annual basis in line with the reforms being undertaken by the agency under its Local Currency Debt Market Development program.

Announcement on the volume of auctions, meanwhile, was retained on a quarterly basis.

“Greater transparency, enhanced predictability, and a more stable issuance program allows for a more active participation of our GSEDs in the primary and secondary market. This, in combination with the implementation of the Enhanced GSEDs Program and GS Repo Program, will allow us to achieve our objective of a deeper and more robust government securities market, thus reducing risk premium and leading to lower borrowing costs for the republic,” National Treasurer Rosalia de Leon said.

For 2018, the national government is programmed to borrow P889.51 billion from local and foreign lenders. Of the amount, 26 percent will come from foreign financing, while the remaining 74 percent will be borrowed domestically.