BTr rejects tenders for P20 billion in T-bills as investors’ bid rates shoot up

MANILA, Philippines – The Bureau of the Treasury (BTr) rejected all the bids for P20-billion worth of Treasury bills on Monday—the first auction for this year—as investors’ bid rates shot up.

For the 91-day debt paper, the P8-billion offering was under-subscribed as investors tendered only a total of P6 billion. The average rate for the three-month IOUs rose to 2.309 percent, up by 89.3 basis points from the previous rate of 1.416 percent last Dec. 1, before the BTr rejected bids.

Both the 182-day and 364-day Treasury bills, meanwhile, were oversubscribed as P8.95 billion and P7.2 billion were tendered, respectively for the P6 billion offered for each.

The average rate for the 6-month debt paper increased to as high as 1.951 percent before the BTr rejected bids at an average rate of 1.824 percent. During the preceding auction, 182-day T-bills were sold at just 1.771 percent.

As for the one-year IOUs, the average rate registered before the BTr rejected bids was 2.059 percent, 22.3-basis points higher than the previous auction’s 1.836 percent.

National Treasurer Rosalia V. de Leon told reporters after the auction that the bid rates were “way, way above where they should be.”

De Leon explained that while investors have attributed their higher bid rates to the depreciating peso against the US dollar, such could be offset by the downward trend in the inflation rate as well as the still stable interest rates in the United States despite a possible hike.

“There’s really no reason for rates to drastically increase. The rates have already increased over the holidays, and during the last auction, there was a significant rise. They’re also asking for a much, much bigger increase in the rates during this auction,” de Leon said.

Even as the BTr did not successfully auction off the P20 billion in debt instrument as scheduled, the National Treasurer reported a “safe buffer of cash” in the Treasury.

Meanwhile, De Leon said the government has not set an actual date for the issuance of Republic of the Philippines (ROP) bonds to foreign investors, even as she noted that historically, an offshore bond issuance was conducted during the first quarter.