THE government on Tuesday rejected the three-month and six-month Treasury bills after banks submitted bids that would significantly increase the rates.
The auction committee only raised P4 billion from the sale of the 364-day T-bills, which fetched an average rate of 1.75 percent, or an increase of 61.7 basis points from the previous yield of 1.133 percent.
Tenders reached P9.37 billion and the government made a full award of P9.37 billion.
Had the auction committee accepted the bids for the other tenors such as the 91-day and the 182-day paper, the yield would have climbed by more than 100 basis points.
For the 91-day paper, the benchmark of banks when pricing their loans, it would have fetched an average rate of 1.941 percent, or 126.1 basis points higher from the previous rate of .69 percent. Tenders reached P6.9 billion and the government was supposed to accept P2 billion.
For the 182-day T-bills, the rates would have climbed to 2.292 percent, or 161 basis points higher than the previous rate of .682 percent. Tenders reached P6.58 billion, or more than double oversubscribed from the government’s offer of P3 billion.
National Treasurer Roberto Tan said the auction committee was ready to make a full award since the bids are already closer to those of the secondary market rates.
“We are willing to follow the secondary market rates, but the one-year rates are lower than the 91-day and 182-day tenors,” Tan said after the auction.
Normally, Tan said the rates of the longer- term notes should be higher than the shorter-term paper, which was not the case during Tuesday’s auction.
At the secondary market, the yield of the three-month paper stood at 2.55 percent, 2.47 percent for the six-month debt and 2.5 percent for the one-year notes.
Tan said despite a series of rejections for the said shorter-term paper, the government is still comfortable with its cash position since money is still coming in through its other auctions such as the retail treasury bonds (RTB).
Tan said the government raised a total of P110.1 billion for the auction of the RTBs, some P54.97 billion for the 10-year paper and P55.12 billion for the 15-year debt.
The 10-year and the 15-year carry a coupon rate of 5.75 percent and 6.25 percent, respectively.
Of the said amount, about P53 billion, or about half of the total, was sold to the government’s bond sinking fund; P20 billion to the banks during the Dutch auction held last October 10; P31.46 billion from the selling agents during the public offering period; and P5.64 billion from the government- owned and controlled corporations.
“The appetite of the market is such but it’s a good volume for us,” Tan said.
In March, the government raised P103.967 billion RTBs, but most of it was sold to investors.
