MANILA, Philippines — The government will borrow P630 billion from the domestic debt market in the third quarter in anticipation of monetary policy easing as early as August.
In a memorandum to all government securities eligible dealers released yesterday, the Bureau of the Treasury said it intends to raise a total of P630 billion from both short-term T-bills and long-term T-bonds from July to September.
Broken down, the Treasury will auction off P260 billion in T-bills via the 91, 182 and 364-day tenors. It will also raise P370 billion from T-bonds with maturities of three to 20 years.
The Treasury holds the auction of short-dated T-bills every Monday and T-bonds every Tuesday.
The third quarter borrowing plan is eight percent higher than the P585 billion program in the second quarter.
However, only 85 percent or about P498 billion was raised from the plan.
The Treasury holds the auction of short-dated T-bills every Monday and T-bonds every Tuesday.
The third quarter borrowing plan is eight percent higher than the P585 billion program in the second quarter.
However, only 85 percent or about P498.1 billion was raised from the plan.
“This is part of our borrowing plan for the year taking into account market demand for both T-bills and T-bonds and following our consultation with our market makers,” National Treasurer Sharon Almanza said in a Viber message.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the higher local borrowings for the third quarter has been a consistent pattern after the seasonal increase in tax collections in April.
This is also in line with wider budget deficits being recorded for the past months.
In terms of rates, Ricafort said the possibility of a rate cut by the US Federal Reserve as early as September would significantly influence local yields.
However, the Bangko Sentral ng Pilipinas (BSP) has no scheduled rate-setting meeting in September.
As such, some analysts are expecting that the BSP will finally ease policy rates in its August meeting, effectively moving ahead of the Fed.
“The BSP will likely match any Fed rate cut in the coming months of 2024 and 2025 to maintain healthy interest rate differentials and lower borrowing costs for the government,” Ricafort said.
On the other hand, other economists are also dismissing the possibility of policy easing this year as inflation remains stubbornly high.
Inflation quickened to a six-month high of 3.9 percent in May, bringing the five-month average to 3.5 percent.