Outstanding local IOUs hit a new high of P 8.57T in March

The value of outstanding local debt securities hit a new high of 8.57 trillion pesos in March following the issuance of 457.8 billion pesos of treasury bonds (RTBs) at retail last month.

The latest data from the Bureau of the Treasury (BTr) on Friday showed that the nominal amount of treasury bills and bonds outstanding last month rose further from 8.11 trillion pesos in February.

The increase came despite the BTr rejecting bids at its March auction, which reached high bid rates as Russia’s invasion of Ukraine made domestic creditors nervous.

Last month, the BTr granted just 91.7 billion pesos out of its 250 billion peso national borrowing programme. But treasury and finance officials had said recent RTB revenue would offset rejected IOUs to fund the national budget.

Treasury bills outstanding jumped to 7.91 trillion pesos in March from 7.39 trillion pesos in February. Five-year RTBs with a coupon rate of 4.875% per annum raised 457.5 billion pesos in new money, plus 259.5 million pesos exchanged for maturing bonds.

It was the government’s 27th RTB issue as well as the 10th under the Duterte administration and likely its last before a new president takes office in mid-2022.

In March, the stock of RTBs – debt paper presented by the government as an “investment” between individuals and groups – reached 3.25 trillion pesos.

On the other hand, the stock of short-term treasury bills fell again to 656.6 billion pesos last month, from 719.6 billion pesos a month ago.

The stock of government securities would rise further as the BTr had planned to borrow 200 billion pesos – 60 billion pesos in treasury bills and 140 billion pesos in bonds – in the domestic debt market this month.

Of the total borrowing of 2.2 trillion pesos programmed by the government for 2022, three quarters or 1.65 trillion pesos would be of local origin. The Philippines is borrowing more domestically to take advantage of excess liquidity in the financial system while mitigating exchange rate risks.

The rest of the 560.6 billion pesos to be borrowed this year would come from low-interest official development assistance (ODA) loans from bilateral and multilateral lenders, as well as offshore bond issues.

Last month, the Philippines raised a total of $2.25 billion through its first foreign commercial borrowing in 2022, including $1 billion through its first “green” bond issue. The BTr had programmed $7 billion in offshore bond issues this year.

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