Gov’t borrows more than planned despite high rates
The Marcos administration was able to borrow more than planned during its first fundraising activity this year despite interest rates rising for the second straight offering.
Auction results showed the Bureau of the Treasury (BTr) raised P17 billion in short-term local debt during Tuesday’s sale of Treasury bills, bigger than the initial target amount of P15 billion.
The offer was met with strong investor appetite, allowing the government to accept some excess demand. The BTr said the T-bills attracted total bids amounting to P39.9 billion, 2.7 times larger than the original size of the issuance.
The BTr fully awarded the T-bills despite borrowing costs sustaining their ascent for the second consecutive auction. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the “reiteration of hawkish local signals” by the central bank prompted lenders to ask for bigger yields.
“Treasury bill average auction yields corrected higher after recent signals of no local policy rate cut soon and inflation is not yet out of the woods,” Ricafort said.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. last month said the central bank would only consider cutting its policy rate if both price growth and inflation expectations were in a “comfortable” range.
This, amid the threat of a prolonged El Niño weather phenomenon, which may jack up food and power costs this year.
At yesterday’s auction, average yield for the 91-day T-bill rose to 5.140 percent, from 4.996 percent recorded in the last offering on Dec. 4.
The 182-day debt paper, meanwhile, fetched a rate of 5.578 percent, costlier than the 5.267 percent seen in the preceding auction.
Lastly, rate charged for the 364-day securities averaged 5.829 percent, which was more expensive than the 5.732 percent seen in the previous issuance.
The government borrows money from creditors at home and abroad to bridge its budget deficit, which is capped at P1.4 trillion this year.
Documents from the budget department showed the Marcos administration is planning to borrow P1.85 trillion onshore in 2024. —Ian Nicolas P. Cigaral INQ
