The Bureau of the Treasury on Monday rejected all bids for the benchmark 91-day bills due to weak demand as investors braced for an even higher inflation in September.
While the Treasury offered P4 billion in three-month bills, tenders fell short and reached only P3.09 billion.
Had the Treasury accepted the bids, the average rate for the 91-day debt paper would have risen to 4.679 percent.
National Treasurer Rosalia de Leon told reporters after the auction that investors were reacting to the announcements of the Department of Finance and Bangko Sentral ng Pilipinas last week that September headline inflation likely hit 6.4 percent or 6.8 percent year-on-year.
“And even other analysts, their prognosis is elevated inflation for September,” De Leon added.
She said it did not help that they expected global oil prices to further pick up and put pressure on domestic commodity prices in the near term.
“So obviously, the bids would continue to be on the high side,” De Leon said.
For the 182-day bills, the Treasury capped the rate at 5.206 percent and awarded P3.2 billion of the P5-billion offering.
Tenders for the six-month IOUs were also undersubscribed at P4.14 billion.
The Treasury nonetheless sold all of the P6 billion in one-year bills it offered at 5.648 percent. The offer was undersubscribed as bids reached P9.82 billion.
The Treasury raised only P9.2 billion out of the P15-billion total offering across the three tenors.
“Even if we did the rejection on the 91-day, at least from the six-month and the one-year that would also be something for us given that it will really spill all over to the following year in terms of the maturities. At the same time, we continue to be comfortable with our cash position after all the continued good revenue collection performance of the BIR (Bureau of Internal Revenue) and the BOC (Bureau of Customs). And we’ve also already done some of our earlier funding from both panda and the samurai [issuances],” De Leon explained.
She said the Treasury would continue to reject bids that would be beyond reasonable benchmarks.
Also, De Leon said the government would explore other financing options, including the planned dollar-denominated global bond sale likely this October or sometime before yearend, as well as about $400 million in program loans from multilateral lenders Asian Development Bank and World Bank.