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CENTRAL GOVERNMENT BORROWING STRATEGY 2020/21 FISCAL YEARTarget for Gross Issuance of Government Bonds is P8 billion and P3 billion for T-Bills At the July 2020 sitting, Parliament authorised the increase in the Bond Issuance Programme from P15 billion to P30 billion. Domestic government borrowing requirement for fiscal year 2020/21 is increased to a gross financing of P8 billion for bonds and P3 billion for Treasury Bills. While the increase in borrowing will help meet the COVID-19 related expenditures, the overall objective remains in support of developing the domestic government securities market.The net issuance for government bonds is planned to be P5.9 billion and for Treasury Bills P2 billion.Target for Gross Issuance of Government Bonds is P8 billion The target for issuance of on-the-run government bonds in 2020/21 fiscal year is P8 billion. This target is a result of the net issuance of P5.853 billion of government bonds and the redemption of P2.147 billion from BW008, which matured September 2020. At the June 2020 auction, P1.345 billion was issued on bonds, while P1.83 billion was raised at the September 2020 auction. As a result the gross issuance need available for the remaining bond auctions in this fiscal year is P4.825 billion.The issuance of the bonds is expected to be distributed evenly during the remaining part of the fiscal year with an average target issuance at each of the planned four bond auctions of around P1.2 billion. The increase in bond issuance is expected to be concentrated on the reopening of the existing benchmark bonds of 10, 5, 2 years and longer segment of above 15 years. In that respect, it is envisaged that more allocation will be made to the main 10-year benchmark (around 40 per cent) and less in other segments; around 20 percent, 25 percent and 15 percent in the 2-year, 5-year and longer segments, respectively. The increase in issuance of government securities is entailing an increase in the number of auctions in this fiscal year to six instead of earlier years quarterly. The higher frequency in auctions is expected to improve liquidity and the price discovery process in the bond market. The six auctions are conducted during the current fiscal year as shown in the Appendix. Table 1 below presents the planned on-the-run bonds in the different market segments. Table 1: On-the-run Government Securities in the 2020/21 fiscal year Maturity segmenton-the-run issueMaturity< 1 year T-Bills2-year BW0013- June 7, 2023 5-yearBW007- March 10, 2025 remains on-the-run until early 2021, when a new 5 year bond is expected to be opened.10-yearBW014- September 5, 2029 remains on-the-run until end of September, 2020 when BW011-September 11, 2031 becomes the new 10 year on-the-run benchmarkVery longBW012- June 13, 2040 and BW015-September 2, 2043 Note: The Ministry of Finance and Development reserves the right to amend the issuance plan for the fiscal year. The Target for T-Bills at end of fiscal year 2020/21 is increased to P3 billion The T-Bill programme during fiscal year 2020/21 is increased from P1 billion to P 3 billion by year end. This will make it possible to discontinue the issuance of the 91-day BoBC by the Bank in order to support the building up of the Government T-Bill programme. The aim of the change is to obtain a clearer separation between monetary operation and debt management. The new T-Bill programme will offer two different maturities of the T-Bills (i.e., the 3- and 6-months T-Bills) at the monthly auctions. (See auction calendar).AppendixAUCTION CALENDAR FOR GOVERNMENT SECURITIES 2020/21 FISCAL YEAR Auction DatePapers for AuctionMay 29, 2020 (this auction has already taken place)6-month T-Bill-02/12/2020BW013- June 7, 2023; BW014-September 5, 2029; BW012- June 13, 2040.August 28, 2020 and September 3, 2020(this auction has already taken place)6-month T-Bill- 03/03/2021 BW013-June 7, 2023; BW007-March 10, 2025; BW014-September 5, 2029; BW015-September, 2043.October 30, 20203-month T-Bill-03/02/2021;6-month T-Bill-05/05/2021Bonds offered at the auctions will be publishedNovember 27, 20203-month T-Bill-03/03/2021;6-month T-Bill-02/06/2021Bonds offered at the auctions will be publishedDecember 31, 20203-month T-Bill-07/04/2021; 6-month T-Bill-07/07/2021January 29, 2021 3-month T-Bill-05/05/2021;6-month T-Bill- 04/08/2021Bonds offered at the auctions will be publishedFebruary 26, 20213-month T-Bill-02/06/2021;6-month T-Bill- 01/09/2021Bonds offered at the auctions will be publishedApril 2, 20213-month T-Bill-07/07/2021; 6-month T-Bill-06/10/2021Note: The Ministry of Finance and Economic Development reserves the right to amend the issuance plan. Actual Bonds and amounts to be auctioned will be published on announcement dates. T-bills and Switches will also be accommodated through the auction programme. ................
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