BY CHINO S. LEYCO Reporter

THE government plans to tap small  investors, particularly overseas  Filipino workers (OFW), to help finance its record budget deficit this year, according to the Bureau of Treasury.

National Treasurer Roberto Tan said there are proposals to launch dollar-denominated retail Treasury bonds (RTB) targeted at Filipinos living and working abroad.

“There are proposals. We’re looking at [them] seriously,” he told reporters after the Treasury bills auction on Monday.

He said the planned RTB issuance would follow the government’s float of Samurai bonds worth $500 million.

Last week, Philippine officials held a road show in Japan to secure support for the Manila’s yen-denominated borrowing.

“There is good demand, and we’re still sounding them,” Tan said, adding that, “We’ll be happy if we can finish it before end-month, depending if the market conditions warrant.”

He said the Samurai bonds would have a tenor of 10-years.

The Philippine government and the Japan Bank for International Cooperation (JBIC) are firming up the guarantee agreement for the yen borrowing.

“February 17 is the signing of the guarantee agreement. After the signing we can launch it, even a month after [the singing],” Tan said.

In January, the government raised $1.5 billion through the sale of dollar-denominated bonds, making it the first Asian sovereign debt issuer in 2010.

To complete its foreign commercial borrowing for this year, the government has to raise another $1 billion.

The government expects its budget deficit to widen to P293.2 billion this year, with P110.9 billion of that revenue shortfall expected in the first quarter.

At Monday’s auction of short-term debt papers, interest rates rose amid investor concern over the Philippines’ near-term prospects with the upcoming national elections.

The yield on the 91-day Treasury bill, which banks use in pricing their loans, increased to 3.935 percent from the 3.897 percent during the previous auction of the short-term debt instruments.

Total tenders reached P4.03 billion for the three-months IOUs, but the government stuck to its original offering and sold only P2 billion.

“I think the market now is looking more on the short-term debt because of the prevailing uncertainties, including the upcoming elections,” Tan told reporters after the auction.

The government has maturing obligations worth 600 euros, or about $1 billion on February 19.

“Our maturing debts were already fully covered,” Tan said.

The yield on the 182-day T-bills likewise rose to 4.2 percent from the previous auction’s 4.165 percent. Investors were willing to buy up to P10.24- billion worth of the government securities, but the auction committee awarded the programmed P3 billion.

Only the one-year T-bill rate fell, sliding to 4.62 percent from the previous 4.667 percent when the debt security was last issued on January 25. Tenders reached P10.38 billion, but the government stuck to the programmed borrowing and awarded P3.5 billion worth of debt papers.

Wise rose to 4.2 percent from the previous auction’s 4.165 percent. Investors were willing to buy up to P10.24-billion worth of the government securities, but the auction committee awarded the programmed P3 billion.

Only the one-year T-bill rate fell, sliding to 4.62 percent from the previous 4.667 percent when the debt security was last issued on January 25. Tenders reached P10.38 billion, but the government stuck to the programmed borrowing and awarded P3.5 billion worth of debt papers.