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THE
Bureau of Treasury on Tuesday rejected total bids of
P8.39 billion for its offer of P7 billion in five-year
Treasury Bonds after rates went too high over the
secondary market rate; the high bids were seen as a
knee-jerk reaction to the higher-than-expected consumer
price index for April.
The
lowest that the banks bid was 8.25 percent and some
placed tenders that went as high as 8.5 percent. At the
last auction of debt papers of the same tenor March 11,
the average rate was 6.565 percent.
Finance
Undersecretary Gil Beltran told reporters they would
have accepted if the bids were no higher than 8.075
percent, or almost the same rate as the secondary
market. “The market is still in a shock after the high
inflation rate [of 8.3 percent in April]. Everybody is
expecting only 7 percent.”
Beltran
said they are also getting over-the-counter placements
from some banks but at March 11 rates.
“It is
externally induced [high inflation rate], it is
something beyond our control…at a certain point the
situation will normalize.”
Sales of
debt papers allow the government to generate money for
its more immediate funding requirements, and a rejection
may be taken as a sign of a comfortable cash position.
This is
the second time that the government rejected bids. Last
week, the government also rejected all bids for P6
billion of one-year Treasury bills offer.
“It
appears there was no interest on the part of the market
to buy Treasury bills. Those were bids we believe
unacceptable,” said the acting Treasury chief, Finance
Undersecretary Roberto Tan.
The
one-year paper has become the substitute benchmark since
the start of April after the Treasury scrapped both the
91- and 182-day T-bills in March when the banks
aggressively started submitting higher rates for their
money.
The
banks’ disinterest showed when they submitted only P3.15
billion even as the government wanted to sell as much as
P6 billion in the March offering. |
