NOTING that the government is awash with cash, National Treasurer Rosalia V. de Leon said the Bureau of the Treasury (BTr) rejected the 364-day Treasury bills (T-bills) on Monday. De Leon said the auction committee nevertheless partially awarded offers for the debt paper with a 182-day tenor.
“The one year, [it was] full rejection; and then partial award for the 182-day [T-bill] because we still see that there’s more room for rates to decline given the expectations on the inflation trend,” De Leon told reporters. “And at the same time, we are really bountiful with cash.”
From an offer size of P6 billion, the auction committee rejected all bids of P7.660 billion for the 364-day T-bill.
Had the auction committee decided to award the full P6-billion on offer, the average annual rate would have reached 6.142 percent, which is nine basis points higher than the previous rate of 6.052 percent.
“We have partially released the report on the first quarter cash operations and you can see that we are doing good in terms of revenues,” De Leon explained. “But for expenditures, it’s like P1 billion a day that we are not spending.”
The 182-day tenor was awarded a partial P3.099 billion from the P5 billion on offer with bids for the security amounting to P8.349 billion.
The average annual rate for the security was capped 5.996 percent showing a 0.9-basis point uptick compared to the previous rate of 5.987 percent.
“We have good revenues. We have been having very healthy auctions even in terms of fund-raising,” De Leon said. “But because of the lower spending for the quarter—and that is attributed to the non-passage of the 2019 budget, we’ve been able to have a very strong cash position.”
The 91-day T-bill was awarded the full P4 billion on offer with bids for the security amounting to P10.593 billion.
The average annual rate of 5.608 percent posted a 0.6-basis point decline compared to the previous auction rate of 5.614 percent.
De leon said the government may adjust its borrowing program specifically for foreign sources.
“We’ll have to adjust on the foreign borrowings, particularly on higher cost,” she said. “But we’ll also have to see if there will be a catch up on spending because the agencies have done the preliminary works already—it’s just short of the award.”
It was reported earlier that the national government recorded a budget deficit of P90.245 billion for the first quarter of 2019, as expenditures outpaced revenues, with the budget gap lower by 41 percent than the P152.171 billion posted in the same period for 2018.
This was also pointed out to be lower by 52 percent than the government’s programmed deficit for the quarter of P188.353 billion.
Broken down, expenditures for the three-month period amounted to P777.990 billion, or an uptick of 1 percent compared to last year’s P771.964 billion but shrank by 11 percent compared to the programmed expenditures for the period of P876.298 billion.
The government reported revenues of P687.745 billion for the period, which is higher by 11 percent compared to last year’s P619.793 billion, but lower by 0.03 percent from the programmed P687.945 billion.
Meanwhile, De Leon said the government is still awaiting approvals from the People’s Bank of China and the National Association of Financial Market Institutional Investors (Nafmii) for it to be able to issue Panda bonds.
She explained that the government can opt for a single tenor for the Panda bonds if the volume is reduced to the renminbi equivalent of around $200 million to $300 million. The original planned volume is the $500-million equivalent-to-renminbi issue under a three-year and five-year tenor.
“We are looking at the same: three and five-year [tenors]. The tranches will depend on; if we are borrowing more than what we have borrowed last time then we may have to look for another tenor bracket,” De Leon said. “We can look at one tenor if we are issuing [a] smaller volume. Otherwise, if there is appetite, then we [are looking at] a longer tenor.”