January 25, 2023 | 00:00
MANILA, Philippines — The government will borrow 200 billion pesos from the domestic debt market next month as interest rates continue to fall for short- and long-term securities.
In a memorandum to all eligible brokers in government securities issued yesterday, the Treasury Office said it would auction 15 billion pesos each in treasury bills for the three Mondays in February. The other will take place on January 30.
Short-term treasury bills will be offered at 5 billion pesos each with benchmark terms of 91, 182 and 364 days. The total treasury bills to be offered will be 60 billion pesos.
For long-term debt securities, the Treasury plans to raise 35 billion pesos each in treasury bills for three Tuesdays in February and one on January 31, for a total of 140 billion pesos.
The proposed T-bonds will have respective maturities of 13, 5, 3 and 10 years.
The February borrowing program is identical to the opening salvo of 200 billion pesos for 2023.
However, the January program was increased to 212.4 billion pesos as the Treasury decided to grant more following lower interest rates demanded by investors.
This month, the Treasury raised 58.4 billion pesos in treasury bonds and granted 154 billion pesos in treasury bonds.
Interest rates are expected to decline in 2023 as local and global inflation also declines.
Last year, inflation stood at 5.8%, but is expected to ease in the coming months. The Cabinet-level Development Budget Coordinating Committee said inflation would moderate to 2.5-4.5% in 2023 as global oil prices begin to stabilize.
In yesterday’s latest auction for January, the Treasury fully allocated 35 billion pesos for the 10-year reissued treasury bills on offer with a remaining life of nine years and seven months.
10-year Treasury bonds averaged 5.913%, down 23.1 basis points from the BVAL benchmark rate of 6.144%, which is the norm for securities.
Rates went from a low of 5.749% to a high of just 5.99%. The average rate was also significantly lower than the coupon rate of 6.75% when the Treasury bills were first issued in September last year.
At that time, the Treasury also raised 35 billion pesos but the rates were higher at 6.703%.
Demand for the securities attracted P93.696 billion, oversubscribing the auction by 2.68 times.
Bids fell slightly by 6% from 99.311 billion pesos on the original issue date. It also slipped 30% week over week.
The latest offer has an expiration date of September 15, 2032.
