The government plans to raise funds from regular debt paper auctions to finance the requirements of Power Sector Assets and Liabilities Management Corp.
“We might just lend them money and include it to our general funding requirements, given that it is a government issuance,” National Treasurer Roberto Tan said on the sidelines of a bond auction Tuesday.
Tan said the treasury was reviewing its borrowing activities to determine the need for a special bond auction for PSALM.
Tan confirmed that the fund for PSALM would come from the Treasury. “We already gave advances in May, I think it was around P7 billion to P8 billion,” he said.
The government plans to raise an initial P30 billion for PSALM after PSALM submits a drawdown schedule.
Meanwhile, the government on Tuesday rejected all bids for the 7-year Treasury bond after investors pushed for “protected” rates.
“The investors who bidded today are fence-sitting by giving very protected rates,” Tan said after the auction.
He attributed the low volume and high bid rates to Monday’s global market selloff in equities. Investors also ignored the slower 2.9-percent inflation in May.
The Bureau of Treasury offered P9 billion for the re-issued bonds, with bids for the long tenor paper undersubscribed at P5.97 billion.
Had the auction committee partially awarded the said government security at P1.185 billion, the bonds would have fetched a coupon rate of 5.175 percent, or 17.6 basis points higher than the rate of the same tenor auctioned a fortnight ago.
PSALM has a funding requirement of P75 billion to P80 billion this year. The Treasury said it could also borrow in behalf of PSALM to secure lower interest rates and relend the proceeds to the power company, the agency in charge of privatizing energy assets.
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