Gov’t rejects all bids for 182-day T-bills

MANILA, Philippines - The government rejected yesterday bids for the 182-day treasury bills (T-bills) as the interest rates sought by banks were deemed too high and unacceptable.

The auction committee, however, accepted the bids for  the 91-day and 364-day T-bills , saying the rates sought by the market for these instruments were reasonable.

Banks sought a 1.515 percent yield on the 182-day debt paper, significantly higher than the 0.001 percent registered in the previous T-bill auction.  Bids reached P3.313 billion or lower than the programmed P6 billion offering.

The yield on the three-month debt papers, meanwhile, averaged at 0.693 percent, up by 69.2 basis points from the previous rate of 0.001 percent.  There was strong demand for the shorter dated instruments with tenders reaching P5.095 billion or 27.375 percent higher than the government ceiling of P4 billion.  The Bureau of Treasury, however, accepted only P3.53 billion.

The latest rate for the one-year debt instruments reached 1.5 percent or 123.7 basis points higher than the 0.278 percent recorded previously.  Bids reached P4.66 billion but the government decided to sell only P3.11 billion, which is well below than the programmed offering of P10 billion.

The government raised only P6.645 billion or just a third of the planned P20 billion offering.

National Treasurer Rosalia de Leon said the government  could afford to reject some bids given the country’s strong liquidity position.

De Leon attributed the increase in  interest rates to higher oil prices and the weakening of the peso against the dollar.

She said the government is expected to borrow P715 billion this year, of which P620 billion will come from the domestic market.

The government has been tapping   borrowings in the last two years  from the local debt market and from bilateral and multilateral sources such as the World Bank and the Asian Development Bank.

De Leon said the government is likely to increase the foreign component of its borrowing program for 2014 to 15 percent from eight percent last year.  The move is aimed at taking advantage of low interest rates offered by multilateral funding sources.