Gov’t to borrow less in April-June
The treasury reduces its borrowing plans as government officials cite the strong cash position of the domestic market

STRONG CASH POSITION. Gov't borrows less in the 2nd quarter of 2012.

MANILA, Philippines – From April to June, the government plans to borrow only P106.5-B from the domestic market, lesser than what it programmed in the first 3 months of the year, the Bureau of Treasury (BTr) said on March 30.

In a notice to securities dealers, the Treasury said government would offer P52.5-B Treasury bills (T-bills) and P54-B of Treasury bonds in the 2nd quarter.

Government considers its cash position in the 2nd quarter strong, explained National Treasurer Roberto Tan in an interview earlier this week.

Tan said government could afford to borrow less given its strong cash position from the successful retail treasury bond sale in February. The treasury sold a record P180-B worth of bonds, giving government more room to meet its financing needs.

The programmed borrowing for the 2nd quarter is 9% less than the P117-B borrowed in the 1st quarter of the year.

The government cut back the size of the regular T-bill actions from P9-B to P7.5-B and also reduced the allocations for shorter dated tenors. 

The allocation for the 91-day T-bill was reduced by 20%, from P2.5-B in the 1st quarter to P2-B in the 2nd. Government is offering only P2-B for 182-day Treasury bills, down from P3-B previously. However government maintained the size of the 365-day T-bill auction at P3.5-B and the T-bond auction at P9-B.

The Philippines still needs to raise $750-M to meet its foreign debt commitments for 2012, but officials believe it will be possible to source more and more of the debt from the local market.

Last week, Finance chief Cesar Purisma said the government is leaning towards sourcing as much as 80% of its borrowing mix from the local market, which is awash with cash.

Still he kept the official target at 75% from local sources and 25% from abroad.

The Philippines is one of the biggest sovereign debt issuers in Southeast Asia.

The government relies on borrowing to plug the budget deficit. Last year, government underspending resulted in a budget deficit of P191.6-B, lower than the original target of P300-B. –

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