High rates for T-bills showed investors keeping cash, prompting rejection of all bids

By: - Reporter / @bendeveraINQ
/ 04:23 PM March 23, 2020

The Bureau of the Treasury rejected all bids for T-bills it offered on Monday as investors held on to their cash in the middle of a Luzon-wide quarantine against COVID-19 that has caused massive disruption to businesses.

The full rejection came in the wake of “throw away bids” as there was “preference to hold cash” during the quarantine period, National Treasurer Rosalia V. De Leon said. The quarantine had already caused 700 factory closures.


In a statement, the Treasury said average bid rates climbed to 3.841 percent for the benchmark 91-day, 4.766 percent for the 182-day, and 5.35 percent for the 364-day T-bills—all “higher as expected.”

Two weeks ago, three-month debt paper fetched an average rate of 3.024 percent, while the six-month and one-year IOUs were awarded last week at 3.398 percent and 3.557 percent.


Also, tenders across the three tenors, or maturity periods, reached only P14.5 billion—P7.5 billion for the P6-billion 91-day, P4.1 billion for the P6-billion 182-day, and P2.9 billion for the P8-billion 364-day—making the auction undersubscribed of the P20-billion total offering.

With the quarantine lasting for four weeks, De Leon said she “expected this to continue,” referring to the “not serious” bids and tepid demand.

Last week, De Leon said that even as the Bureau of Internal Revenue (BIR) extended until May 15instead of the mandatory April 15 its deadline for taxpayers to file and settle income taxes, the government can still afford to finance its priority programs and projects.

“We have cash stashed from the retail treasury bond (RTB) and full-award auctions,” De Leon said, referring to the Bureau of the Treasury’s sale of three-year RTBs last February which generated a record P310.8 billion.

De Leon said the Treasury “hoarded cash already—we are so good in what we are supposed to do.”

While the one-month income tax return (ITR)-filing extension will delay the collection of P145 billion in revenues, De Leon said in Filipino “the country’s pockets are deep.”

De Leon added that the Treasury was already preparing its domestic borrowings program for the second quarter of 2020 with feedback from investors so far indicating “preference for short to belly” government securities because “cash is king.”


The scheduled treasury bond auction on Tuesday (March 24) will be the government’s last domestic fund-raising activity during the first quarter.

Edited by TSB

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