Government rejects bids for 364-day T-bills

The government’s auction committee rejected all bids for the 364-day Treasury bill yesterday as banks submitted unreasonably high offers.

Finance Undersecretary and Acting National Treasurer Roberto Tan said there was a lack of demand for the one-year debt papers auctioned by the Bureau of Treasury (BTr).

“It appears that there is no interest on the part of the market players. These are bids which we think are not acceptable,” he told reporters after the auction.

Tan said investors continued to stay on the sidelines amid skyrocketing inflation and the US economic slowdown.

Had the auction committee accepted the bids, the debt paper would have fetched an average rate of 6.986 percent or 99.3 basis points higher than the 5.993 percent yield last April 14.

The P6-billion offering was also undersubscribed as bids amounted to only P3.15 billion.

“Even in the volume you can see that there is not much interest. We are not expecting rates to go down but right now the market is not yet settled,” Tan said.

Competition with other investment facilities is also pushing Treasury bill rates up.

Investors, for instance, have been parking their cash with the central bank’s special depository accounts (SDAs) which carry high returns.

Placements in the SDA amounted to P591 billion as of end-March this year as the Bangko Sentral ng Pilipinas continued to mop up excess liquidity.

Also yesterday, Tan said the government decided to scrap the issuance of 91- and 182-day T-bills in the second quarter of the year due to lack of demand as investors prefer high yielding longer dated debt instruments.