Gov't rejects all bids for 364-day T-bills

MANILA, Philippines - Treasury bill (T-bill) rates rose yesterday, exceeding expectations and prompting the auction panel to reject all bids for the 364-day bills.

Finance Undersecretary Gil Beltran, who headed yesterday’s auction committee, said uncertainties in the Eurozone continue to make most investors jittery.

“There’s uncertainty in the market fueled by external disturbances like the euro problems. Eventually, it will normalize,” Beltran told reporters yesterday.

The average rate of the 91-day T-bill rose to 1.556 percent from 0.969 percent previously, reflecting an increase of 58.7 basis points.

Total tenders for this paper rose to P6.310 billion, allowing the government to sell the P2 billion programmed debt sale.

Similarly, the 182-day T-bill rose to 1.830 percent from 1.204 percent previously.

For this paper, the auction committee opted for a partial award to prevent the rates from rising too high. Had the auction panel opted for a full award of the P3 billion programmed debt offer, the average rate would have risen to 2.123 percent from the previous rate of 1.204 percent or an increase of 91.9 basis points.

Total tenders reached P5.150 billion. The government settled for a partial award of P950 million.

The government’s auction panel, however, decided to reject all bids for the 364-day debt paper, saying that the offers made by investors were too high.

Had the committee accepted the bids, the average rate would have risen to 2.619 percent from 1.079 percent or an increase of 154 basis points.

Total bids amounted to P4.620 billion, just slightly above the P4 billion programmed offer by the government.

Yesterday’s T-bill auction is the last auction for the year. It is part of the P99 billion local borrowing program of the government for the fourth quarter of the year.

Of the P99 billion, the government had a program to issue P54 billion worth of T-bills and P45 billion worth of T-bonds through the issuance of seven,10 and 25-year T-bonds.

The P99 billion programmed debt sale is lower than the borrowing program of P117 billion set in the second and third quarters of the year and the P114 billion programmed borrowing in the first quarter of the year.

The government borrows from the domestic market through the issuance of Treasury bills and bonds.