Government fails to borrow, rejects all T-bill bids

MANILA, Philippines — The government failed to borrow again from the domestic debt market, marking seven straight weeks of not being able to raise its target amount as rates continue to soar.

The Bureau of the Treasury yesterday rejected all bids for the short-term T-bills, failing to raise P5 billion each for three, six and 12-month tenors.

This is the seventh straight T-bills auction that the Treasury failed to raise its intended amount of P15 billion.

This is also the first time in a month that the Treasury rejected all bids after rates across all tenors jumped by over 100 basis points.

National treasurer Rosalia de Leon said the latest rates cannot be supported or defended.

“Rates offered are untenable even after considering aggressive statements from both the Fed and BSP (Bangko Sentral ng Pilipinas),” De Leon said.

She added that “the Treasury is still in a good position to make a rejection with revenue outperformance.”

The local debt market is still hanging on the latest 75-basis-point rate hike of the US Federal Reserve and the 50-basis-point rate increase by the BSP.

This week’s auction results were a deterioration from last week’s T-bills on offer, where the government raised P3.35 billion.

Rates for the 91-day T-bills surged by 150.7 basis points to 4.66 percent yesterday, a continued upward movement from last week’s rate of 4.397 percent.

The 182-day short-dated debt papers also saw rates picking up by 106 basis points to 4.902 percent.

The Treasury likewise denied all bids for the 364-day T-bills after rates averaged 4.947 percent, soaring by 103.5 basis points, reaching a high of close to six percent.

Yields for all the tenors went up on a weekly basis.

Overall demand for the short-term securities dropped by almost 20 percent week-on-week.

Total bids reached only P14.238 billion, short of the intended P15 billion. Last week, demand was at P17.664 billion.

By tenor, bids for the three-month debt papers increased to P5.78 billion, but six-month and full-year securities both went down, totaling P4.78 billion and P3.678 billion, respectively.

The Treasury aims to borrow P200 billion from domestic creditors this month. Of the amount, P60 billion is expected to come from short-dated T-bills.