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NG sets P215-billion borrowing plan for Nov.

By Luisa Maria Jacinta C. Jocson, Reporter

THE NATIONAL Government (NG) plans to borrow P215 billion from the domestic market in November, the Bureau of the Treasury (BTr) said.

The BTr released its borrowing plan for November, which is 7.5% higher than the P200-billion plan this month. The government raised only P118.738 billion from domestic borrowings in October.

The BTr said it will borrow P75 billion in Treasury bills (T-bills) and P140 billion in Treasury bonds (T-bonds) next month.

For T-bills, the Treasury will offer P5 billion worth of 91-day, 182-day, and 364-day T-bills on Nov. 2, 7, 14, 21, and 28.

For the long-term tenors, the BTr is looking to raise P35 billion in three-year T-bonds on Nov. 3; P35 billion in five-year debt papers on Nov. 8; P35 billion in 12-year instruments on Nov. 15; and P35 billion in 20-year bonds on Nov. 22.

National Treasurer Rosalia V. de Leon told reporters in a Viber message that the November borrowing program was bigger since it has five weeks, compared with the four weeks in October.

A trader said that next month’s borrowing plan was “nothing out of the ordinary.”

“We have seen the volume and frequency hover around those levels this year, but uncertainties remain as to how high the yield premium will investors ask for, and if the government will be able to absorb these foreseen elevated yields in the month ahead,” the trader said in a text message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said this is consistent with the government’s preference for more local borrowings in the overall borrowing mix.

“The higher borrowings programmed may be due to the rejections in some government securities auctions in recent weeks,” he said in a text message.

In October, the government raised just P10.624 billion in T-bills, as half of the auctions resulted in full rejections while the rest was partially awarded.

At the same time, only P108.114 billion was raised via T-bonds against the initial P140-billion program, as only one out of the four auctions were fully awarded.

The trader said sentiment on local bonds this month “somewhat improved” as market participants digested implications of aggressive rate hikes made by the US Federal Reserve.

“The prospect for higher interest rates in November is still there given that the Fed and the Bangko Sentral ng Pilipinas are both expected to continue to hike aggressively,” the trader added.

The Fed has raised key rates by 300 basis points (bps) since March and is expected to deliver another large rate hike at its Nov. 1-2 policy meeting.

BSP Governor Felipe M. Medalla this week said that the local central bank may need to push for further tightening to keep in step with the Fed.

The BSP is increasingly likely to raise rates by 75 bps at its Nov. 17 meeting. The central bank has raised rates by 225 bps.

The gross domestic borrowing program is at P1.91 trillion this year, composed of P52 billion in T-bills and P1.86 trillion in fixed-rate T-bonds.

The government borrows from local and external sources to help fund a budget deficit capped at 7.6% of GDP this year.

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