Treasury rejects bids for 91-day T-bills as rates rise

The Bureau of the Treasury on Monday raised only P12 billion out of its P20-billion T-bill offering as it rejected bids for the 91-day debt paper amid higher rates.

While the Treasury declined tenders for the P8 billion it offered for the benchmark government securities, it awarded P6 billion each in 182- and 364-day IOUs.

National Treasurer Rosalia V. de Leon told reporters after the auction that there was “no reason to accept” bids for the 91-day treasury bills as most investors were ready to pay a price higher than the previous auction’s rate of 2.995 percent as well as secondary market rates.

On 182-day securities, the average rate inched up by only 0.3 basis point to 3.174 percent, a sideway movement, according to De Leon.

The 3.576-percent annual rate for the 364-day T-bills, meanwhile, was marginally lower by 0.1 basis points compared to the previous auction.

Monday’s auction attracted a total of P59.8 billion in tenders across the three tenors, or maturity periods. They were oversubscribed by nearly three times.

“There’s really now a move going to longer term” debt, De Leon said, adding that next week’s T-bond auction will likely fetch a higher subscription.

US analysts see the movement into longer-term debt papers as a sign of investors growing weary and of a recession lurking just around the corner.

“Given the lower rates, they [investors] are going after higher yields” from longer-dated securities, De Leon added.

Also, De Leon said the market was being flushed with cash following the central bank statement of yet another cut in banks’ reserve requirement ratio before the end of 2019./TSB