Return of 35-day T-bills after 15 years a letdown as investors wanted excessive rates

The Bureau of the Treasury on Tuesday suffered yet another setback in its campaign to raise more funds locally amid the COVID-19 pandemic, as it rejected offers to buy 35-day T-bills, returning after 15 years, because of high bid rates.

While tenders for the five-week IOUs amounted to P29.617 billion or almost double the P15-billion offering, investors wanted an average of 3.39 percent yield from the debt papers.

In a statement, the Treasury noted that the average rate was “higher than the prevailing rates of comparable government securities.”

National Treasurer Rosalia V. de Leon said that such a short tenor T-bill was priced at a lower 3.01 percent in the secondary market.

Tuesday’s offering was the first time since 2004 that the Treasury auctioned off 35-day securities.

As far as the Treasury was concerned, it still has “plenty of ammunition, that’s why we rejected” bids for the short-dated debt, De Leon said.

Since last week, the Treasury fully rejected tenders for a total of P85 billion in treasury bills and bonds even as the government had to shell out more money to support displaced workers, front-line health professionals, and the economy as a whole during the month-long quarantine to prevent the spread of the COVID-19 disease.

De Leon earlier attributed the high bid rates for government securities to investors’ preference to keep cash in their pockets during the crisis.

But De Leon said Republic Act (RA) No. 11469 or the “Bayanihan to Heal as One Act” signed by President Rodrigo Duterte last week contained measures ensuring that the government would have sufficient funds for COVID-19 response.

For one, the Deparment of Finance (DOF) last Monday (March 30) said that government-owned or controlled corporations (GOCCs) can unleash P200 billion in cash or its equivalent in various accounts, on top of national government agencies’ accounts outside the Treasury Single Account (TSA) to implement the Bayanihan law.

Edited by TSB