POOR APPETITE The Bureau of Treasury’s auction on Monday, November 28, 2011, showed poor investor appetite for short-term government securities, offering only P9.12 billion for the government securities—barely above the state’s total offering of P9 billion.
The government on Monday rejected all tenders for Treasury bills as investors tried to push rates up by an average of at least 100 basis points.
Finance Undersecretary Gil S. Beltran, who chaired the auction committee in lieu of National Treasurer Roberto B. Tan, said in an interview that buyers were asking for too much.
“There were two contending thoughts among committee members during the discussion,” Beltran explained.
One is that the government is amenable to allowing rates to increase, acknowledging the need for a market correction.
“Specifically, we agree that an (average) interest of below one percent for the 91-day T-bill is too low,” Beltran said, referring to the 0.969 percent set the previous bidding two weeks ago.
The other argument is that the state should not accept big adjustments because this would adversely affect the value of investments that are already in the market.
Had the Treasury accepted bids and awarded all its offers, yield on the three-month T-bill would have gone up by 119 basis points to 2.165 percent.
Likewise, yield on the six-month bill would have risen by 141 basis points to 2.614 percent, while that of the one-year bill could have gone up by 180.1 basis points to 2.88 percent.
Also, all resulting rates would have been higher than that prevailing in the secondary market at the time of the auction.
Further, Monday’s auction showed poor investor appetite for short-term government securities, offering only P9.12 billion for the government securities—barely above the state’s total offering of P9 billion.
The benchmark bill was the only security that was oversubscribed, getting P3.3 billion for the P2 billion on offer.
The six-month T-bill attracted P2.92 billion, less than the P3-billion offer.
The one-year T-bill got P2.9 billion worth of tenders—barely three-quarters of the P4 billion offered.
“International volatility, particularly in Europe, is still greatly affecting investor interest,” Beltran said. “Maybe, two weeks from now (in the next auction), we can see better results.”