MANILA, Philippines — More domestic borrowings in March lifted the national government’s outstanding debt to a new high of P10.77 trillion at the end of the first quarter, while investors on Monday shrugged off the expected faster inflation in April and parked more of their money in safe bets like government securities, pulling T-bill rates down across the board.
In a report on Monday, the Bureau of the Treasury said the government’s outstanding obligations further rose by 3.5 percent from P10.41 trillion in February mainly due to the P463.3 billion in retail treasury bonds (RTBs) sold to small investors last March.
Year-on-year, debt jumped 27.1 percent as of March from P8.48 trillion a year ago. The government ramped up borrowings since the second quarter of last year to bolster its war chest against the COVID-19 pandemic.
Outstanding foreign debt, which accounted for 28 percent of the total, declined by 0.5 percent month-on-month to P3.03 trillion due to a stronger peso, even as the stock climbed by 13.7 percent from P2.66 trillion a year ago.
Comprising the bulk of outstanding obligations, domestic debt rose 5.2 percent month-on-month and jumped by a faster 33.2 percent year-on-year to P7.74 trillion.
The government borrows more locally, mainly through the sale of treasury bills and bonds, to take advantage of flushing domestic liquidity while minimizing foreign exchange risks.
During Monday’s auction, the Treasury raised P28.2 billion from short-dated T-bills, exceeding the P25-billion offer as it accepted double of the non-competitive bids for the six-month debt paper.
The P5 billion in the benchmark 91-day Treasury bills fetched an average rate of 1.306 percent, down from 1.369 percent last week.
The P11.2 billion in 182-day securities were awarded at 1.629 percent, down from 1.714 percent previously.
The annual rate for the P12 billion in 364-day IOUs eased to 1.863 percent to 1.88 percent, such that the Treasury opened its tap facility window to sell another P7 billion to the 11 government securities eligible dealers (GSEDs)-market makers.
Across the three tenders, tenders totaled P94 billion, making the auction nearly four times oversubscribed.
“We welcomed strong participation in today’s auction with rates declining across tenors in spite of projected elevated inflation last month,” National Treasurer Rosalia de Leon said. Most economists had forecast April’s headline inflation to be above March’s 4.5 percent due to price pressures coming from the renewed lockdowns in Metro Manila and four neighboring provinces accounting for half of the economy.
De Leon said “it seems the market is expecting a policy rate cut.” The Bangko Sentral ng Pilipinas’ (BSP) Monetary Board will next tackle the monetary policy stance on May 13.
The Treasury had programmed to issue P170 billion in T-bills and bonds this month—a similar volume as April’s program, which had bigger weekly offerings and longer bond tenors compared to previous months due to strong investor demand and easing rates.
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