BTr rejects ‘too high’ T-bill rates

The government decided against borrowing from domestic lenders at its first attempt in November as investors asked for rates that were deemed too high amid expectations of higher inflation and rising interest rates.

The auction committee led by the Bureau of the Treasury (BTr) rejected all tenders that totaled at P16.085 billion against the government’s offer that totaled at P15 billion or P5 billion for each tenor of Treasury bills (T-bills).

Had they awarded all the offers for the three-month T-bills, the average rate would have jumped to 4.768 percent—an increase of 54.8 basis points (bps) from 4.22 percent in the previous award.

Also, the yield on the six-month T-bills would have risen by 63.4 bps to average at 5.284 percent from 4.65 percent.

Further, the interest rate on the yearlong T-bills would have gone up by 92.3 bps to an average of 5.798 percent from 4.875 percent.

These new would-be rates, if full awards were made, were all higher than prevailing secondary markets rates—by 101.8 bps than the 3.75 for three months; by 74.9 bps than the 4.535 percent for six months; and by 91 bps than the 4.888 percent for the one year.

The 91-day T-bills were oversubscribed with tenders reaching P8.485 billion. However, buyers were interested only in P4.93 billion worth of six-month T-bills and P2.67 billion worth of yearlong T-bills.

National Treasurer Rosalia de Leon told reporters that the market was pricing the debt paper with “excessive buffers to cover for the United States Federal Reserve’s sustained hawkish actions and the Bangko Sentral ng Pilipinas’ (BSP) forecast of October inflation reaching 7.1 percent to 7.9 percent.”

The Treasury has scheduled four more auctions of T-bills this month as part of a P215-billion borrowing plan for November.  INQ