During the auction, the government only raised P3.13 billion or less than half of the P9 billion programmed for the day as the auction committee rejected all of the bids for the 182-day debt paper and made a partial award on the other tenors.
The 91-day T-bills, the benchmark of banks when pricing their loans, fetched a rate of .69 percent or 25.2 basis points higher than the previous rate two weeks ago.
Tenders only reached P5.02 billion, with the committee awarding only P630 million, or just more than a quarter of the P2 billion programmed for the auction.
National Treasurer Roberto Tan said that most of the bids are “throwaway” or the banks just place a higher bid without the intention of winning, hoping that the government will accept their rates.
“There’s no clear direction. So everybody’s coming out with their own rates disparate with each other,” Tan said after the auction.
He said, however, that the government needs to have an award in order for the rates of the 91-day yield close to the secondary market yield of .5 percent.
“We’re just following the rates of the secondary market so the yield for the next auction will not be adjusted too much,” Tan said.
Meanwhile, the auction committee rejected all of the bids for the 182-day paper as the rates offered by the banks were deemed as “unreasonably high.”
If the auction committee accepted the bids, the rates for the said tenor would have increased by as much as 180.2 basis points to an average yield of 2.484 percent. Tenders only reached P3.81 billion or close to the government’s offer of P3 billion.
At the secondary market, the said debt paper is trading at .75 percent.
“There is also a risk aversion move on the part of investors amid the Euro debt crisis. They would want to shift to dollar instruments. Clearly, you can see outflows here as well as in the equities market,” Tan said.
The government also made a partial award for the 364-day paper, which fetched a yield of 1.133 percent or just 18.9 basis points higher than the previous rate.
Tenders, however, were also thin, only reaching P5.42 billion as against the government’s offer to buy at P4 billion. The government needed to make a partial award to prevent the rates from going as high as 1.622 percent or 67.8 basis points higher than the previous rate.
At the secondary market, the said debt paper is trading at 1.1 percent.
Meanwhile, Malacanang finally gave its nod to the BTr on its proposed retail treasury bond (RTB) offering with an authority to borrow by as much as P500 billion.
The government is expected to sell RTB during the fourth quarter of the year after the BTr has already made intent for the flotation to the market last week.
“It was already approved last week. We started market sounding last Friday. We’re flexible, depends on where the demand will go,” Tan said.
Tan explained that although the agency was given by up to P500 billion borrowing authority to sell to individual investors, the BTr may not use the entire amount.
“We would only borrow what we need, contingent upon the market demand. There is no expiration on the P500-billion authority, and the remainder could be carried over until fully utilized,” Tan said.
