BTr resumes issuance of 1-yr T-bills

The Bureau of the Treasury (BTr) said yesterday it will resume the issuance of one-year Treasury bills (T-bills) next week.

National Treasurer Omar Cruz told reporters that the BTr would be auctioning off P1 billion worth of 91-day T-bills on Monday, along with P2 billion worth of 182-day notes and P2 billion worth of the one-year notes.

Last week, the BTr cancelled the issuance of one-year T-bills, reducing down its scheduled borrowing from P5 billion to P2 billion.

Cruz said the BTr had been studying market preferences since the beginning of the year which clearly indicated that the T-bill market is largely being driven only by customer requirements.

"It’s a very illiquid market now and the people who are still there are those who need to fill up their clients’ requirements," Cruz said. "In view of the market’s limited appetite for longer-dated securities shown by limited tenders and trades, we decided to cancel the one-year notes at the previous auction."

Next week, however, Cruz said the BTr will resume the issuance of the one-year T-bills, speculating that the market "has returned" after its apparent lack of appetite for the one-year notes.

If this appetite does not materialize as expected, however, Cruz said the BTr is ready to suspend the issuance of longer-tenor notes and resume only when there is enough demand.

Cruz said the government would rather issue more bonds where the market appetite was concentrated rather than continue issuing one-year notes that no one wanted.

Cruz said the demand for the short-end notes was spurred mainly by bank clients who need 90-day money. The longer-end, however, attracted only throw-away bids.

"This market is now strictly dictated by client requirements," Cruz said. "If bank clients did not need these instruments, they wouldn’t bother with it at all because it is very illiquid."