MANILA, Philippines - Investors continued to snub the short-term 91-day Treasury bill (T-bills) as they preferred longer-term debt papers, prompting the Bureau of the Treasury (BTr) to review the composition of the tenors being auctioned off every week.
The Treasury rejected yesterday all bids for the three-month debt papers as the rates offered by investors were way above the secondary market rates. The P2 billion offering was also undersubscribed as tenders only reached P1.93 billion.
Had the auction committee accepted the bids, yield for the 91-day T-bills would have gone up by 72.1 basis points to 2.895 percent from the previous yield of 2.895 percent.
On the other hand, the six-month T-bills fetched 2.274 percent or 2.6 basis points lower than the previous auction’s 2.3 percent. Bids for the P2 billion offering for the 182-day T-bills amounted to P3.6 billion.
Interest rate for the one-year government securities reached 2.45 percent or five basis points lower than the previous rate of 2.5 percent as bids amounted to P5.133 billion and the committee made a full award of P3.5 billion.
In an interview with reporters, National Treasurer Roberto Tan said investors continued to pick the longer dated 182 and 364-day debt papers as they submitted “throw away” bids for the 91-day debt papers.
“The rates (for the 91-day T-bills) are not even near the secondary rates. They (investors) want some good returns and they prefer long-term investments,” Tan said.
He told reporters after yesterday’s auction that the committee would review the size of the T-bills being offered to investors every week.
The treasury currently sells P7.5 billion worth of T-bills every Monday consisting of P2 billion worth of 91-day debt papers, P2 billion worth of 182-day government securities, and P3.5 billion worth of 364-day T-bills.
“We will think about it, we have to adjust,” Tan said.
The government is set to release its borrowing program for the third quarter within the week.
Data showed that the amount of 91-day T-bills was already reduced to P2 billion in the second quarter from P2.5 billion in the first quarter while the size of 182-day debt papers being sold was cut to P2 billion from P3 billion and the size of 364-day T-bills was retained at P3.5 billion.
Last June 11, the auction committee rejected all bids for the 91, 182, and 364-day T-bills.
Investors appetite has been affected by the spillover from the sovereign debt crisis in Europe and the economic uncertainty in the US.
The national government relies heavily on local and foreign borrowing to fund its budget deficit. The country’s budget shortfall is expected to hit roughly about P280 billion this year from P197.8 billion last year.