Gov’t makes full award of P20B in T-bills

THE BUREAU of the Treasury awarded yesterday P20 billion in short-term treasury bills amid a healthy appetite from investors for government debt paper at reasonable market rates.

The Treasury sold to investors P8 billion worth of 91-day bills at an average rate of 1.541 percent, up 12.5 basis points from 1.416 percent during the auction last December. Tenders for the three-month securities reached P25.9 billion, more than thrice the size of the offer.

The 182-day debt paper attracted P13.61 billion in bids before the Treasury sold P6 billion worth at 1.758 percent, a rate that was 1.3-basis points lower than the previous auction’s 1.771 percent.

As for the 364-day bills, P6 billion was awarded at 1.947 percent, 11.1-basis points down from 1.836 percent previously. The one-year IOUs fetched P8.6 billion in tenders.

The Treasury rejected all the bids for P20 billion in bills during the first debt paper auction of the year held last January. National Treasurer Rosalia V. de Leon said bid rates at that time were “way above where they should be.”

Yesterday, investors “offered aggressive bids” although still “reflective of market price conditions,” said National Treasurer Roberto B. Tan, who has returned from his stint as executive director at the World Bank. “The rates were within our estimates and reading of the market.”

“All bids were rejected last month, so investors were looking for new supply,” Tan noted, adding that since some bills were maturing this week, there were freed up cash looking for new investments with the same tenor.

The “good turnout” of bids likewise came on the back of the Bangko Sentral ng Pilipinas’ pronouncement that it would keep policy rates accommodative, the national treasurer said.

For Tan, the successful auction was brought “both by the expectation side and the search for new issues where they can invest.”

Meanwhile, Tan also told reporters that the Treasury has again postponed the rollout of non-restricted trading of government securities, which was supposed to start yesterday, as the agency needed more time to address participants’ concerns.

“On the settlement side, there were concerns on possible failed trade,” he said.

The Treasury would gather feedback from participants this week based on another set of end-to-end market testing of the process from the order stage to the settlement stage, Tan said. “We just want to ensure that the launch will have, as much as possible, no serious hitches.”
Despite the delay in implementation, participants remained “very enthusiastic,” according to Tan.

The initiative’s initial implementation date of Nov. 24, 2014, was cancelled just four days before the schedule and was then moved to Jan. 5 this year. The live date was again pushed back to Feb. 2 under a Treasury memorandum issued last December.

Under the Department of Finance’s latest directive, government securities were to be allowed to trade between various entities, regardless of their tax category or classification, in any Treasury-accredited government securities trading market.

Transfers between market participants will be allowed regardless of tax status, hence will allow tax-exempt institutions to trade in the debt market.

The Treasury had noted that Department Order 141-95 issued almost two decades ago had “restricted the transfers of securities between taxable and tax-exempt institutions, effectively segmenting the government securities market along these tax categories.”