THE GOVERNMENT is looking at tapping the offshore bond market within the second quarter, the Bureau of the Treasury (BTr) said.
“We still have $2.5 billion left within the borrowing program, so we’re whether we issue (within the) second quarter or third quarter,” National Treasurer Sharon P. Almanza told reporters on the sidelines of an event on Thursday.” There may be a possibility for a second-quarter issuance.”
In January, the federal government raised $2.75 billion from a triple-tranche dollar bond issuance. It generated $500 million from the 5.5-year bonds at a coupon rate of 4.25%; $1.5 billion from the 10-year paper at a coupon rate of 5%; and $750 million from the 25-year papers at a 5.75% coupon.
Ms. Almanza said US Treasury yields have remained relatively stable compared with local rates, making a less volatile environment.
Meanwhile, the BTr is hoping the central bank’s off-cycle policy move on March 26 will help calm markets and drive demand for presidency securities in the approaching quarter.
This follows the drop in bids and spike in yields in March after the US-Israeli war on Iran began.
The Bangko Sentral ng Pilipinas (BSP) kept its policy rate unchanged at 4.25% during a surprise off-cycle meeting last week, amid growing concerns over the impact of the Middle East war on the economy.
BSP Governor Eli M. Remolona, Jr. had said they decided to face pat as their growth outlook stays clouded and as emerging inflationary risks prove supply-driven, “for which monetary policy has limited effectiveness.”
The BSP now expects headline inflation to average 5.1% this 12 months from 3.6% previously. If realized, the headline print would breach its 2%-4% goal.
Ms. Almanza said that a big maturity in April price about P200 billion could add liquidity to the market and drive demand for presidency securities.
“We’ve got a maturity in April. So, hopefully, those funds will probably be reinvested,” she said.
The federal government is trying to borrow as much as P784 billion from the domestic debt market within the second quarter or as much as P364 billion via Treasury bills and as much as P420 billion through Treasury bonds.
Ms. Almanza noted that the borrowing plan for the second quarter includes a mixture of short-term and medium-term securities.
“We’re combining the long with the short. After which we’re reducing the quantity for the longer tenors,” she said.
Ms. Almanza also said foreign participation in the federal government securities market could surge as soon because the country’s re-entry into JPMorgan Chase & Co.’s Government Bond Index-Emerging Markets (GBI-EM) is confirmed by the primary week of April.
“They said that the investors don’t wait for the actual inclusion. So, after the announcement, funds will [start coming in already],” she said.
In September last 12 months, Philippine peso-denominated government bonds (RPGB) were tagged as “Index Watch Positive,” which is the ultimate review phase for the bonds’ potential inclusion in JPMorgan’s GBI-EM.
JPMorgan’s GBI-EM tracks the performance of sovereign and quasi-sovereign bonds issued by emerging market countries. The country’s inclusion will must be approved by a certain percentage of investors reviewing the index.
The Philippines’ global peso notes were faraway from the GBI-EM in January 2024 as a result of illiquidity. Potential inclusion within the index are RPGBs issued from 2023 with tenors as much as 20 years. — A.M.C.Sy