BTr rejects all bids for T-bills

MANILA, Philippines — The Bureau of the Treasury (BTr) rejected yesterday all bids for Treasury-bills (T-bills) as the market asked for higher rates amid expectations of a possible interest rate hike in the US next year.

During yesterday’s auction, the Treasury rejected all tenders for 91-day, 182-day and 364-day T-bills after average bids increased across-the-board.

“Unreasonable offers were provided this afternoon during the auction. The committee decided to make a full rejection in all tenors,” National Treasurer Rosalia de Leon told reporters after the auction.

Submitted bids for three-month securities jumped 62.1 basis points to 2.769 percent from 2.148 percent in the previous auction.

Meanwhile, traders demanded for an average rate of 3.02 percent for 182-day debt notes, 45.7 basis points up from the previous auction of 2.563 percent.

Offers for one-year T-bills also averaged 3.3 percent, 34.8 basis points higher than the previous rate of 2.952 percent.

Total tenders amounted to only P7.6 billion, falling short of the P20 billion offering volume.

According to De Leon, government securities eligible dealers (GSEDs) may have submitted higher bids during the auction due to the expected policy rate hike of the US Federal Reserve next year.

“At the same time, I think banks are preparing for the closing of the books so there is not much enthusiasm. They also feel that given the very liquid position of the Treasury, we will not also be inclined to accept the high rate offered by the banks today,” she said.

Meanwhile, De Leon said credit watcher Fitch Ratings’ move to upgrade the country’s rating to BBB from the minimum investment grade of BBB- bodes well for the government’s planned issuance of $1 billion dollar-denominated global bonds in early 2018.

“I think, if ever we go out, it’s very good timing following the Fitch upgrade today, But of course you see the markets are already pricing ROPs much tighter given without the Fitch upgrade,” she said.

De Leon said the BTr is continuously monitoring market conditions for the bond float.

“We are watching markets closely given expectations on the Fed action next year, also because of the expected Yellen exit and maybe also awaiting any pronouncement coming from the incoming Fed chair,” De Leon said.