Treasury rejects 91-day T-bill bids as investors held on to cash amid COVID-19 fears

While the economy grapples with the COVID-19 pandemic, the Bureau of the Treasury on Monday (March 16) rejected bids for the benchmark 91-day T-bills as investors held on to their cash, pushing bid rates up.

Tenders for the P6 billion in three-month debt paper that the Treasury offered fell short at P4.97 billion, while average bid rates further rose by 57.6 basis points (bps) to 3.6 percent from last week’s 3.024 percent.

This, for National Treasurer Rosalia V. de Leon, meant there was “practically no interest.”

De Leon attributed the higher bids and undersubscription for the 91-day to investors’ “preference to hold cash” amid the one-month community quarantine of Metro Manila to prevent the COVID-19 disease from spreading.

Asked if the Treasury expects the same reception to short-dated government securities during the entire month of quarantine, De Leon replied: “It depends on outcome of measures to contain spread of COVID-19.”

The Treasury nonetheless sold P6 billion in 182-day T-bills at an average of 3.398 percent, up from 3.312 percent last week.

As for the P8 billion in 364-day IOUs, the Treasury fully awarded them at 3.557 percent, down from 3.588 percent previously and lower than secondary market rates.

“There are investors who need longer than 91-day for yield pickup,” De Leon explained, citing that bids for one-year debt amounted P26 billion.

The Treasury raised P14 billion from the six-month and one-year IOUs it offered.

Across the three T-bill tenors, tenders totaled P42.3 billion, making the auction over two times oversubscribed the P20-billion offering.

In an advisory, De Leon said that during the quarantine, the Treasury will have a skeletal workforce for the following operations and services: settlement of secondary market trades; auction of government securities (T-bills or T-bonds); servicing of domestic and foreign debts; MDS replenishment; fund transfer settlement; investment and foreign exchange trading; and processing of application for fidelity bonding.

Edited by TSB