Gov't to reduce T-bill offering

After overshooting its programmed domestic borrowings for the first four months of the year by as much as P37.721 billion, the Bureau of Treasury is likely to reduce its weekly Treasury bill (T-bill) offering by P500 million from the current P4 billion, sources said over the weekend.

They said the reduction will be done in the next few weeks.

"There is a plan to reduce the weekly offering by P500 million because we have overborrowed in the first four months of the year. There were heavy placements from the over-the-counter (OTC) facility," sources said.

Government corporations, particularly the two pension funds, Social Security System (SSS) and Government Services Insurance System (GSIS) were among the top investors in the T-bills at the OTC facility. With the depressed stock market, they said SSS and GSIS have shifted their investible funds from equities to T-bills.

During the first four months of the year, the government borrowed P46.065 billion from domestic sources, exceeding its P8.344-billion program by P37.721 billion. They said the government took advantage of the stable interest rates during the period.

With domestic interest rates projected to go up after a series of rate hikes initiated by the US Federal Reserves and the Bangko Sentral ng Pilipinas (BSP), they said it would be wise for the government to reduce its T-bill offering. Anyway, they said it has been rejecting high bids thrown by the government securities dealers at its regular auction. -- Jun Ebias

The BSP increased its overnight rates by 100 basis points last week, first on Wednesday and then on Friday, in reaction to a half-percentage point rise in the US rates. The rise in the BSP rates is expected to be reflected in today's (Monday) regular T-bill auction.

The government, they said can afford to reject high bids since it has built up its cash reserves during the period. As of end-April, its cash balance, deposited with the BSP and various banks, stood at P162.314 billion, up from P115.470 billion in end-1999.

"We (the government) want to borrow less. we have a comfortable cash position," sources said. --