Gov’t to sell 10-yr bonds anew

MANILA, Philippines - The government will sell 10-year bonds for the first time in a year as part of its P135 billion domestic borrowing program for the third quarter.

The Bureau of Treasury has kept its domestic borrowing ceiling at P135 billion given its strong liquidity position.

Under the plan, the government will sell P20 billion worth of 91-, 182- and 364-day Treasury bills per month from July to September.

The Treasury bill auctions will be held on July 9, Aug. 6 and Sept.r 3.

The government will offer P25 billion worth of seven, 10 and 20-year Treasury bonds on July 24, Aug. 20 and Sept. 18, respectively.          

 For this year, the Aquino administration has programmed to  borrow P715 billion, of which P620 billion will come from the domestic market.

The government’s program for the borrowing mix for 2014 is 85 percent for domestic and 15 percent for foreign.

The government regularly holds auctions of securities to help fund the country’s budget and provide investors with fresh investment options.

The Aquino administration will continue to rely more on domestic sources than on foreign creditors to avoid substantial exposure to foreign exchange risks.

The government borrows funds to pay maturing obligations and plug the deficit in its budget.

 The country relied heavily on domestic borrowings last year to capitalize on the local financial system’s strong liquidity and help ward off pressures on the exchange rate.

Foreign borrowing was limited to loans from development institutions such as the Asian Development Bank, the World Bank and Japan International Cooperation Agency.

The country has been favoring local borrowings than overseas since the start of 2011 as part of the Aquino administration’s goal of paring down foreign-currency related risks.

For 2015, the government is seen to borrow about P700.8 billion from both domestic and foreign sources. The amount represents a four percent decline from the P730.03 billion planned borrowings this year.

Of the P700.8 billion, P606.1 billion will come from the domestic market and the remaining P95.7 billion from foreign lenders.  This would be equivalent to a borrowing mix of 86:14 in favor of domestic credit.

Bulk of external gross borrowings or P54.4 billion will comprise program loans while P32.6 billion will be in the form of bonds and P8.7 billion in project loans.

The national government’s debt as a proportion of the country’s total economic output fell 2.3 basis points to 49.2 percent last year from 51.5 percent a year earlier.  This was in line with the Aquino administration’s goal of paring down the ratio to below 45 percent by 2016.

 The debt-to-GDP ratio, one of the key indicators closely watched by major international credit rating agencies, is a measure of the government’s capacity to settle its obligations.