NG to borrow P215B locally in Aug.

THE NATIONAL GOVERNMENT (NG) plans to borrow P215 billion from the domestic market in August, the Bureau of the Treasury (BTr) said on Wednesday.

The August borrowing plan is 7.5% higher than the P200-billion program for July. However, the government raised just P194.81 billion from domestic borrowings this month.

The BTr will hold auctions for Treasury bills (T-bills) every week, which is projected to raise P75 billion.

Meanwhile, the auctions for Treasury bonds (T-bonds) are estimated to generate P140 billion.

National Treasurer Rosalia V. de Leon said in a Viber message that the increase in domestic borrowings is due to the additional auction date for the month.

According to the BTr, P5 billion worth of 91-day, 182-day, and 364-day T-bills will be offered on Aug. 1, 8, 15, 22 and 29.

For the long-term tenors, the Treasury is looking to raise P35 billion in three-and-a-half-year T-bonds on Aug. 2; P35 billion in seven-year debt papers on Aug. 9; P35 billion in 10-year instruments on Aug. 16; and P35 billion in five-and-a-half-year bonds on Aug. 23.

“Interestingly, there’s not much offering for long-end bonds next month than initially anticipated despite the huge interest generated the past few auctions,” a trader said.

In July, the government raised P140 billion as planned via T-bonds on the back of robust demand for higher-yielding longer tenors amid expectations of higher interest rates due to mounting inflationary pressures.

It also opened its tap facility three times in July, awarding an additional P5 billion, P20 billion, and P10 billion within the month.

Next month’s offering was as expected with the government shifting to more domestic borrowings to minimize foreign exchange risks, said Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

The National Government intends to raise P2.47 trillion with about 77% coming from domestic sources this year.

Earlier this month, Finance Secretary Benjamin E. Diokno also said that the government seeks to reduce its foreign exchange risks.

“The financing mix, if I remember right, is 75%-25% (in favor of domestic borrowing) and for the longer term we will try to increase this to 80-20. We will borrow domestically at 80% and 20% from foreign sources,” he said.

The gross domestic borrowing program is at P1.91 trillion this year, composed of T-bills that are expected to bring in P52 billion and fixed-rate T-bonds that are seen to raise P1.86 trillion.

“However, more domestic borrowings would lead to some pickup in local interest rates than otherwise amid higher demand for funds from the National Government that could compete with other borrowers from the private sector,” Mr. Ricafort said.

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

In June, the National Government’s budget deficit widened by 43.8% to P215.5 billion from a year earlier. — Diego Gabriel C. Robles