Gov’t to issue P135-B T-bills, bonds

MANILA, Philippines - The government will issue P135 billion worth of Treasury bonds and bills in the second quarter, 50 percent higher than the P90 billion raised in  the first quarter of year.

In a notice to government securities dealers, the Bureau of the Treasury said it would sell P60 billion worth of 91-day, 182, and 364-day T-bills and P75 billion of three, five and 10-year bonds from April to June.

Proceeds from the debt sale will help finance the government’s budget deficit, which is on track to fall below its target of two percent of gross domestic product this year.

As much as 86 percent of the state’s borrowing requirement will come from domestic lenders while the remaining 14 percent will be sourced overseas.

The Aquino administration wants to continue to rely on local funding to cut its dependence on external debt.  Since 2009, the country has lengthened the average maturity of government debts from seven to 13 years.

The government plans to hold a peso-denominated bond swap this year to lengthen the maturity of its debt and boost trading.  Its last domestic bond exchange was done in August 2014 with the issuance of P140 billion worth of 20-year bonds.

The government has programmed to borrow about P700.8 billion from both domestic and foreign sources this year.

Of the P700.8 billion, P606.1 billion or 86 percent will come from the domestic market and the remaining P95.7 billion or 14 percent will be sourced externally.

The ratio of domestic borrowing to total debt may likely go up to  88 percent in 2016 and increase further to 89 percent in 2017.

Gross borrowing is seen to reach P760.3 billion pesos in 2016 and will decrease to P688.1 billion.

The higher the fiscal deficit, the higher will be the borrowing requirements of the government.