BORROWINGS by the Marcos Jr. administration more than doubled in June from a year earlier in the state’s scramble to meet government financing needs despite rising interest rates.
The government’s gross borrowings surged by 119.54 percent to P579.569 billion in June from P263.991 billion in the same month last year, latest data from the Bureau of the Treasury (BTr) revealed.
The government ramped up its domestic borrowings as it doubled year-on-year to P342.979 billion from P167.579 billion.
Domestic debt issuances for the month consisted of P182.540 billion in net Treasury bills and P160.439 billion in fixed-rate Treasury bonds.
Meanwhile, offshore borrowings jumped by 145.39 percent to P236.590 billion in June from P96.412 billion a year ago.
The Philippines issued its second US dollar bond offering last June, shortly after the interim deal between Washington and Tehran to end the war, and raised a total of $2.5 billion from the triple-tranche global bonds.
About P22.221 billion in project loans and P61.284 billion in program loans were also secured by the government during the month.
Those brought the total gross borrowings for the first half of the year to P1.821 trillion, 14.45 percent higher than the P1.591 trillion in the same period a year ago.
Peso-denominated borrowings grew by 7.31 percent to P1.276 trillion in the six-month period from P1.189 trillion a year earlier.
On the other hand, financing from foreign sources amounted to P544.802 billion as of end-June, up by 35.40 percent from P402.351 billion in the prior-year period.
Government bond yields have climbed as investors took into account geopolitical risk premium since the escalation of the Middle War conflict, with the 10-year yield rising by a cumulative 110 basis points and the 5-year by 104.5 basis points after the Bangko Sentral ng Pilipinas resumed tightening last April.
‘Markets continue to reprice for higher oil-driven inflation and another BSP hike,’ UnionBank said in a note. ‘Our measure of cumulative yield increases since the BSP’s April tightening pivot indicates the adjustment process is rather advanced, even at the front end.’
Borrowing mix
ACCORDING to National Treasury Sharon P. Almanza, the government has revised its borrowing mix in response to market conditions and the Middle East conflict.
‘Given the current scenario and also we’ve been monitoring the liquidity, [and] how the rates have changed, we’ve slightly shifted our financing,’ Almanza said in a televised news program last week.
From the original 75:25 financing mix, the government will now source 70 percent of its borrowings from domestic sources, while 30 percent will be borrowed externally, Almanza said.
‘Raising funds for the government is not an easy task,’ she said. ‘We don’t want to put more pressure on the rates.’
Almanza added that interest rates remain her primary concern as Treasury seeks to fund government operations while keeping the budget deficit on a fiscal consolidation path.
The government plans to raise a total of P2.682 trillion this year, higher by 3.15 percent than last year’s P2.6-trillion financing target.