Gov't scraps sale of short-term T-bills in 2nd qtr
Cites market's lackluster appetite
By Michelle Remo
Philippine Daily Inquirer
First Posted 00:42:00 03/25/2008
MANILA, Philippines--The government has scrapped the sale of 91- and 182-day treasury bills from its second-quarter schedule of securities auctions, responding to the lackluster appetite for the short-term instruments seen in the first three months.
The Bureau of the Treasury announced Monday that it would borrow P84 billion from the domestic capital market in the second quarter to help finance its expenditure requirements and pay off maturing obligations.
But the borrowings will not involve the sale of 91- and 182-day bills, to give way to the offering of more 364-day bills. The BTr said demand for short-term instruments were focused heavily on the one-year bills.
Apart from the 364-day bills, the government will also sell treasury bonds with tenors of 3, 4, 5, 7, 10 and 20 years.
For the second quarter, the government will auction the 364-day T-bills every other Monday, and T-bonds every other Tuesday.
The debt offering for every auction schedule was set at P6 billion for the
T-bills and P7 billion for the T-bonds.
The P84 billion to be borrowed in the second quarter of the year is of the same amount as that scheduled in the first quarter.
Most of the auctions for the 91- and 182-day bills in the first quarter were a failure, as the BTr's auction committee had been rejecting bids offered by banks.
The committee said the bids were unreasonably high given the government's improving budget condition.
In January, the government posted a budget deficit of only P13.9 billion, lower than the P20.7 billion recorded in the same period last year.
Finance Undersecretary and Acting National Treasurer Roberto Tan earlier said that the government would respond to market demand and would not continue selling 91- and 182-day bills if the market did not want these.
Weak appetite for T-bills was partly blamed on the special depository account (SDA) made available by the Bangko Sentral ng Pilipinas (the Philippine central bank) to banks. The SDA offers higher interest rates than T-bills of comparable tenors.
Amid insinuations of stiff competition offered by the SDA to the government's
T-bills, the BSP announced two weeks ago that it was no longer offering short-term SDAs. Banks wanting to place funds in the SDA may only do so for the long term.
The volatile external environment brought about by fears of a pending US recession was also blamed for weak appetite for short-term government securities.
Tan said that appetite for T-bills may return to normal if the fears caused by a downturn in the US economy begin to wane.
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