Treasury rejects T-bond coupon, sees reign of cash in time of COVID-19

The Bureau of the Treasury on Tuesday (March 24) rejected all bids for seven-year T-bonds on Tuesday, realizing that “cash is king” in times of crisis like the ongoing COVID-19 pandemic.

In a statement, the Treasury said bid rates came with higher rates of as much as 7 percent and an average of 5.583 percent.

National Treasurer Rosalia V. De Leon said “submission too high from our internal estimates”.

Since it was an original issue, the Treasury did not award or else the coupon would be set at a high of 7 percent, De Leon said.

Just like Monday’s T-bill auction, investors held on to their cash as de Leon pointed out that “cash remains king” while the COVID-19 disease lingered.

Tenders nonetheless reached P31.35 billion for the P30-billion offering, making the auction oversubscribed.

De Leon said she expects market appetite for government securities to improve following this week’s twin action of the Bangko Sentral ng Pilipinas (BSP)—a further reduction in banks’ reserve requirement ratio (RRR) on Tuesday and its $300-billion repurchase agreement with the Treasury announced last Monday.

“This is the time for cooperation,” De Leon said of the BSP’s monetary support for the national government’s programs to fight the COVID-19 disease. “We seriously appreciate the BSP’s accommodation.”

De Leon said the second-quarter domestic borrowings program was “still under discussion,” even as the Treasury announced it will sell P20 billion in T-bills—P6 billion in 91-day, P6 billion in 182-day, and P8 billion in 364-day—on March 30, Monday next week, after this week’s last two first-quarter auctions.

Edited by TSB