The government will raise next month P200-B from local borrowings utilizing the treasury bonds and bills that it would float. At least this time, it would be borrowing from local fund sources like banks and financial companies rather than from foreign lenders, which bear interest rates (based on foreign currencies), surcharges and penalties and others.
The Bureau of Treasury said it would borrow locally some P200 billion, through treasury bonds and treasury bills on January 3, 10, 17 and 24, 2022. It plans to offer treasury bills of P5 billion each in 91-day, 182-day and 364-day debts at each auction.
For the longer term, T-bonds of P35 billion each in seven-year debts on January 4 and 25 will be floated. It plans to offer P35 billion in four-year securities on January 11 and another P35 billion in 10-year debt on January 18.
The bureau posted an advisory on its website on Thursday saying it would borrow P60 billion in Treasury bills (T-bills) and P140 billion in Treasury bonds (T-bonds) next month.
The January borrowing plan is higher than the P70 billion planned for December. The Treasury last borrowed P200 billion in November.
The January borrowing program was expected to return to the November volume so the Treasury could resume normal borrowing levels, a bond trader commented adding it was too early to comment on demand expectations.
“Initially, we think this will put pressure on the seven- to 10-year space, which will cause a steepening of the yield curve.”
Another bond trader said the return to the regular borrowing plan was expected after the reduced volume in December.
“With no auction awards for fixed-rate Treasury notes this month, investors who are still awash with liquidity welcome the government’s borrowing plan to start the year.”
National Treasurer Rosalia V. de Leon has not replied to a Viber message of BusinessWorld.
She said this month that the government would borrow less from the domestic market next year to make way for private sector lending.
The Treasury raised P30 billion out of the P70 billion planned in December. It sold P30 billion in T-bills as planned but rejected all bids for P40 billion in T-bonds.
De Leon had said the government rejected all bids for the reissued bonds on Dec. 14 because there was room for rates to decline, with inflation easing and with the central bank vowing to keep borrowing costs steady to support economic recovery.
The government borrows from foreign and local sources to plug its budget deficit that is expected to hit 8.2 percent of economic output this year.
Disaster loan
The Department of Finance (DoF) will draw $80 million (P4 billion) from a World Bank loan to support the government’s rehabilitation efforts in regions devastated by Typhoon Rai, locally named Odette.
In a statement, Finance Secretary Carlos G. Dominguez III said the government would draw from the $500-million World Bank credit line for disaster recovery.
“This week, the DoF will draw $80 million from the World Bank disaster financing loan to fund the amount with cover in the 2021 budget,” he said.
The World Bank in November approved the $500-million fund for a contingent line of credit the Philippines can use to manage the financial impacts of disasters and diseases.
The loan can be drawn as soon as the president declares a state of calamity or public health emergency.
The President on Tuesday declared a state of calamity in Western, Central and Eastern Visayas, Mimaropa (consisting of the provinces of Mindoro, Marinduque, Romblon, and Palawan), Northern Mindanao and the Caraga Administrative Regions
Dominguez said the government would draw another $120 million from the same loan program in the first week of January, when the loan cover will become available in the 2022 national budget.
The agency said the loan program would help support the country’s ability to manage climate risks and disease outbreaks.
DBM to release P1B to LGUs from OP Contingency fund
Dominguez said that the Budget department would release P1 billion to local government units affected by the typhoon from the president’s contingent fund.
The money would be released on Friday, he told reporters in a Viber group message, citing Budget Officer-in-Charge Tina Rose Marie L. Canda.
Duterte on Tuesday said he would spend P10 billion for typhoon recovery efforts.
While P2 billion is available under the national disaster risk management fund, another P2 billion will come from the president’s contingency or special purpose fund, Ms. Canda told a news briefing on Wednesday.
The remaining P6 billion is expected to come from the 2022 national budget, BusinessWorld reported.
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