BTr rejects all bids for T-bills amid spike in rates

MANILA, Philippines — The Bureau of the Treasury (BTr) once again rejected all bids for short-term government securities as investors continued to ask for higher rates amid concerns about the coronavirus disease 2019 or COVID-19 outbreak.

“The auction committee decided to reject all bids for the Treasury bills as rates rose sharply across all tenors,” the BTr said.

Had the auction committee decided to fully award the 91-day securities, they would have fetched an average rate of 4.517 percent.

This would be 149.3 basis points higher than the 3.024 percent recorded three weeks ago when the debt papers had their last successful auction.

Total tenders amounted to P7.6 billion, lower than the P10 billion offering.

Rates for the 182-day debt notes would have averaged 4.259 percent, 86.1 basis points higher than the previous week’s 3.398 percent.

The P5 billion offering was slightly undersubscribed, with total bids amounting to P4.06 billion.

Lastly, the average rate for the 364-day T-bills would have reached 4.402 percent had the auction committee decided to make a full award. This would be 84.5 basis points up from 3.557 percent two weeks ago.

Total tenders reached P5.55 billion, slightly higher than the P5 billion offer size.

Earlier, National Treasurer Rosalia de Leon said the market’s appetite continued to be on the short end of the curve, with investors preferring to hold on to their cash amid the contagion.

For this reason, the Treasury decided to offer 35-day T-bills this month. The first auction will be held today.

“This should be appealing and put investors’ money to work,” De Leon said when asked what is the expected market response for the securities.

“It has very short maturity so funds will be available when needed. There is still opportunity cost for holding to cash,” she said.

Meanwhile, De Leon said the BTr has already finalized its repurchase (repo) agreement with the Bangko Sentral ng Pilipinas (BSP) for the purchase of P300 billion worth of government securities. The funds will be used to bankroll programs to keep the economies afloat amid the pandemic.

She said the debt papers were issued at a “revenue neutral” rate.

“Revenue neutral because the repo rate is zero percent and deposit rate is also zero percent,” she explained.

The national treasurer also welcomed BSP Governor Benjamin Diokno’s statement that the central bank is ready to raise this stimulus package if needed.