The Department of Finance (DOF) made this pronouncement as officials brushed aside market rumors that the government was in the market for a $1-billion loan.
Finance Secretary Juanita Amatong told reporters yesterday that aside from the issuance of the short-term cash management bills (CMBs), RTBs are also under consideration since this would allow the government to tap the retail market.
Amatong admitted that the administration cost was higher for the government, but said the issuance of more RTBs would mobilize retail investments that are otherwise confined to savings instruments.
"If the interest on savings is as low as they are now, retail investments would prefer to invest on RTBs," Amatong said.
"That would widen their investment options and also contribute to the development of the market."
Amatong said there was no amount on the table yet but she said the possible issuance of RTBs could supplement the amount that would be generated from CMBs.
"The bottom line here is how much it would cost us to do this," Amatong said. "
The Bureau of Treasury has already decided to temporarily suspend its T-bill and T-bond offerings and instead issue short-term CMBs as banks continued to push interest rates up due to concerns over political uncertainties.
The BTr had originally targeted to raise P18 billion from the issuance of T-bonds and around P22 billion from T-bills. Some of this amount would now have to be generated through CMBs.
However, National Treasurer Mina Figueroa also said the BTr was still considering the possibility of a 10-year bond offer since insurance companies have earlier expressed interests in the instrument.
"We still have to continue talking to them because it remains to be seen what kind of interest we will be offered for 10-year bonds," she said. "We don’t want to be tied to high interest rates for such a long period so that will be under negotiation."
According to Figueroa, the CMBs might end up being cheaper for the government rather than allowing the interest rates go up on T-bills, especially the benchmark 91-day T-bills which are used to determine bank lending rates.
According to Figueroa, banks are claiming that the lack of liquidity in the market was due to the increase in the banks’ liquidity reserve requirements.
"They said they were still adjusting," she said. "If its true, then we’ll see how long it takes for them to adjust. In the meantime, we might just use the CMBs to raise funds."