Government to borrow P310 billion from local market in Q4

MANILA, Philippines — The government will borrow P310 billion from the domestic debt market in the fourth quarter in anticipation of further monetary policy easing.

In a memorandum to all government securities eligible dealers released yesterday, the Bureau of the Treasury said it intends to raise P310 billion from both short-term T-bills and long-term T-bonds from October to December.

Broken down, it will auction off P220 billion in T-bills via the 91, 182 and 364-day tenors. It will also raise P90 billion from T-bonds with maturities of five to 20 years.

The Treasury holds the auction of short-dated T-bills every Monday and T-bonds every Tuesday.

The fourth quarter borrowing plan is 51 percent lower than the P630 billion program in the third quarter.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the lower local borrowings for the fourth quarter is a seasonal matter, considering the holiday-shortened weeks especially in the latter part of December.

The borrowing requirements of the country are also seasonally lower in the last quarter, with less maturities of government securities as the government nears the completion of its financing program  for the year.

In terms of rates, Ricafort noted that further easing from the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP) would significantly influence local yields.

Last week, the Fed delivered a jumbo-sized 50-basis-point rate cut, its first time to do so since March 2020.

The Fed is expected to ease again by the same magnitude before the year ends.

On the domestic front, the BSP said there is a possibility of two more 25-basis-point cuts during its policy meetings in October and December.

Last month, the BSP moved ahead of the Fed and finally eased rates by 25 basis points to 6.25 percent from the over 17-year high of 6.50 percent.