Government to issue P20-B retail T-bonds to finance deficit

The government will issue P20-billion worth of retail treasury bonds (RTBs) in April to help finance its budget deficit for this year.

Finance sources told reporters over the weekend that the offer was being readied for April and two government financial institutions have been tapped as lead underwriters to handle the issue.

The government expressed optimism that it would be able to raise the full P20 billion, considering the market’s reaction to previous RTB offers.

Last year, the Bureau of Treasury (BTr) was able to raise P60 billion from RTB issues, providing the government with the flexibility it needed to support its budget deficit.

For the first quarter of the year, the government plans to issue P9.5 billion worth of Treasury bills (T-bills), mostly in short-term 91-day T-bills.

The BTr also decided to issue longer-dated treasury bonds with maturities of 10 and 20 years, in an effort to stretch out the maturity of its domestic borrowings.

The BTr said the 2003 volume of treasury bills would be P500 million more than this year, as it decided to increase the volume of its bi-monthly 91-day tenor from P3.5 billion this year to P4 billion.

The BTr offered some P17 billion worth of long term foreign exchange treasury bonds in January with maturity ranging from two years to four years.

In February, the government sold P16 billion worth of bonds with a P2 billion offer of 20-year bonds. For March, the offer was for P17 billion, including a P1-billion offer of 20-year bonds and a P2 billion offer of P10-year bonds.

The increase was in conjunction with the decision of the government to source 52 percent of its borrowing requirement from the domestic market.

National Treasurer Sergio G. Edeza said the increase would be applicable to the benchmark 91-day T-bills.

"We’re looking to tap the cheapest part of the yield curve to finance the budget deficit," Edeza explained.

On the other hand, there will be no change in the offer volume for the 182-day and the 364-day T-bills. Both will stay at P3 billion and P2.5 billion, respectively.

At the sametime, Edeza announced that the T-bonds volume offering has also been raised by P500 million to P3.5 billion to bring the monthly volume to P17 billion for the first quarter of the year.