War risk cuts PH gross borrowings in March
Elevated interest rates amid the Middle East war prompted the Philippine government to scale back domestic debt issuances, cutting total gross borrowings by nearly 40 percent in March.
Data from the Bureau of the Treasury’s (BTr) latest cash operations report showed that total gross borrowings plunged 39.4 percent year-on-year to P116.6 billion.
The slump was driven by a 70.4-percent drop in domestic borrowing, which settled at P46.74 billion during the month from P157.8 billion last year.
Throughout March, local investors demanded significantly higher interest rates on government securities.
In response, the BTr rejected bids in several auctions for the month, ultimately raising much less than planned in almost all of its scheduled offerings.
The war risk premium weighed heavily on Treasury bond issuances, which fell to P55.22 billion. This was less than half of the P132.4 billion raised in the same month last year.
Treasury bills, meanwhile, hit a net negative of P8.47 billion as the government paid off more maturing debt than it issued.
Finance Secretary Frederick Go earlier said that the rejection of aggressive bids was a “balancing act” between securing funding and managing borrowing costs. He noted that the government has no plans to raise debt levels amid the war.
Already, the BTr has trimmed its domestic borrowing program for the second quarter to P784 billion from P824 billion in the previous quarter.
While domestic borrowings fell, the government pivoted to foreign lenders as external borrowings surged 101.7 percent to P69.91 billion.
