The value of outstanding debt securities issued by the government in the local market reached a record 8.17 trillion pesos in 2021 after the issuance of 5.5-year retail Treasury bonds (RTBs) in December , according to the Office of the Treasury (BTr).

The latest BTr data on Wednesday showed that the nominal value of Treasuries and bonds outstanding at the end of December 2021 crossed the 8 trillion peso mark for the first time as it fell from 7.9 billion pesos in November.

Treasury IOUs at the end of 2021 increased from P6.69 billion at the end of 2020.

The government borrows from the domestic debt market primarily through weekly treasury bill and bond auctions, as well as larger issues of OTRs and the country’s first-ever retail dollar bonds (RDBs). ‘last year.

Amid the COVID-19 pandemic, the Bangko Sentral ng Pilipinas (BSP) also provided the national government with a short-term interest-free loan. Last December, the government repaid its interim advances of 540 billion pesos from the BSP, then borrowed 300 billion pesos this year.

Rely on local debt

The Philippines relies heavily on local debt more than foreign borrowing, as the financial system remained awash with liquidity, while the government wanted to temper currency risks.

Data showed Treasury bills in circulation fell further to 796.1 billion pesos last month from 852.1 billion pesos at the end of November. Volumes of benchmark 91-day, 182-day and 364-day treasury bills all fell to 111 billion pesos, 174 billion pesos and 511.1 billion pesos, respectively, as the Treasury authorized the maturity of the securities and cut December auction volumes in a bid to pull the debt-to-gross domestic product (GDP) ratio below 60% by year-end.

On the other hand, the stock of fixed-rate Treasury bills jumped to 7.37 trillion pesos at the end of December, against 7.05 trillion pesos in November, even as the Treasury settled for 360 billion pesos. RTB pesos on December 2.

The latest borrowing via RTBs – 330.5 billion pesos of new money, plus 29.5 billion pesos of change with two sets of bonds maturing in early 2022 – reached a coupon rate of 4.625% when they were offered last November and presented by the Treasury as an investment vehicle for small investors with extra liquidity during the Christmas holidays.

Proceeds from the government’s 26th overall issue and the Duterte administration’s ninth RTB issue have been injected into the national budget to fund economic recovery efforts after the crisis caused by the pandemic.

Outstanding Retail Bonds

At the end of 2021, the RTBs in circulation stood at 2,790 billion pesos.

Outstanding bonds also included 252.5 billion pesos over three years; 477.8 billion pula in five years; 908.9 billion pesos in seven years; and 966.5 billion pesos over 10 years.

The outstanding 10-year land reform bonds amounted to P7.2 billion; 475.2 billion pula in 20 years; 235.9 billion pesos in 25 years; and 97.1 billion pesos from the Philippine bond at par of $6.582 million redeemed in 28.5 years.

Also outstanding were 1.1 trillion pesos of benchmark bonds; 50 billion pesos in CB-BoL 25-year Treasury bonds; 25.2 billion pesos in onshore dollar treasury bills; and 81.2 billion pesos in two-tranche RDBs.

As a reminder, the Philippines’ debt-to-GDP ratio hit a 16-year high of 63.1% at the end of September 2021, surpassing the 60% threshold that credit rating agencies considered a manageable level for emerging markets. like the Philippines, as the accumulation of debt has exceeded the return to economic growth.

President Duterte’s economic directors had aimed to end 2021 with an annual debt-to-GDP ratio of 59.1%, which will be the highest since the 65.7% posted in 2005.

Private sector economists had warned that the ballooning debt could lead to a downgrade in the country’s investment grade credit ratings, currently making debt cheaper.

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