BTr to offer P6-B notes next week

The Bureau of Treasury (BTr) said yesterday it will scrap an auction of four-year T-bonds on Sept. 9 and instead offer P6 billion worth of promissory notes next week.

Deputy Treasurer Mina Figueroa, speaking to reporters after an auction of three-year T-bonds said the government will offer P3 billion each of five- and seven-year promissory notes. The exact date next week has yet to be set.

"Banks prefer the promissory notes because they can use that to reduce their non-performing loans. There has been huge demand for this instrument," Figueroa said.

Promissory notes are classified by banks as loans rather than purely government securities.

On May 19, the government successfully sold P3.5 billion worth of five-year promissory notes.

The Treasury sold yesterday an original series of three-year T-bonds at a coupon rate of 10.125 percent, higher than the 9.5 percent at the last sale on July 1.

The Treasury, which was offering P3 billion in the three-year bonds, awarded P2.5 billion worth after tenders reached P8.39 billion.

The government will use the proceeds to help fund its budget deficit, which it aims to cap at P202 billion this year after blasting through its target three times in 2002.

Before the auction, debt traders had seen the coupon rate at the 10-percent level but warned the Treasury might repeat its recent rejection of bids due to high premiums being demanded by the market in the wake of a mutiny by rogue troops on July 27.

On Monday, the Treasury rejected all bids at an auction of 91-day, 182-day and 364-day T-bills.

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