35-day T-bills, absent in market for 15 years, returning in April as investors cling to cash

The government will borrow from domestic sources a total of P190 billion next month, including P30 billion in 35-day Treasury bills which are making a comeback after an absence of more than 15 years.

While the Bureau of the Treasury usually released its borrowings program on a quarterly basis, its March 25 memo to all qualified sellers of government securities covered only the upcoming treasury bill and bond offering issuance this coming April.

In April, the Treasury will auction off a total of P100-billion worth of the usual T-bills across three tenors, or maturity periods with a total of P20 billion every week—P10 billion in 91-day, P5 billion in 182-day and P5 billion in 364-day on March 30, April 6, April 13, April 20 and April 27.

The Treasury will also sell P15-billion each in 35-day T-bills on March 30 and April 22.

National Treasurer Rosalia V. de Leon said it was not the Treasury’s first time to sell 35-day debt papers.

In a text message, former national treasurer and now Philippine Deposit Insurance Corp. (PDIC) president Roberto B. Tan said: “If I remember correctly, [the last issuance of 35-day T-bill] was during Mina Figueroa’s time.”

Figueroa served as national treasurer in February to October 2004.

De Leon said the 35-day IOUs will be sold given that “cash remains king as markets continue to remain watchful of impact of measures to battle COVID-19.”

Also, De Leon noted that since the Bangko Sentral ng Pilipinas (BSP) suspended its weekly term deposit facility (TDF) auction—which had taken care of short-term liquidity—the 35-day bill “provides outlet for investors, while at the same time provides funds for our short-term requirements.”

The Treasury will likewise sell P30 billion each in one-year and two-year T-bonds on April 14 and April 28.

Even the bonds to be offered next month have relatively shorter tenors than the usual three, five, seven and even 10-year securities sold in the past.

De Leon said “appetite continues to be on short-term tenors.”

The issue date of these government securities will be two days after their auctions.

For the entire second quarter of 2020, De Leon said the “situation is still fluid” as the COVID-19 pandemic takes its toll not only on the global but also domestic economy.

“We will monitor developments and assess results of our auctions in April,” she said.

The Treasury’s last two auctions for the first quarter of 2020, both held early this week, resulted in full rejections as bid rates climbed because investors held on to their cash.

During the first quarter, the Treasury auctioned off P140 billion in government securities monthly—P80 billion in T-bills, on top of P60 billion in T-bonds.

Edited by TSB