Treasury rejects all bids for P20B in T-bills

MANILA, Philippines–The Bureau of the Treasury rejected all bids for P20 billion worth of treasury bills on Monday—the first auction for this year—as investors sought high rates.

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

Both the 182- and 364-day bills 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 Treasury rejected bids at an average rate of 1.824 percent. During the preceding auction, 182-day bills were sold at just 1.771 percent.

As for the one-year IOUs, the average rate registered before the Treasury 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 were attributing their higher bid rates to the depreciating peso against the 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.

“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 Treasury did not successfully auction off the P20 billion in debt instrument as scheduled, the national treasurer noted that there remained a “safe buffer of cash” in the Treasury.

Meanwhile, De Leon said the government has yet to 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 usually conducted during the first quarter.