THE Bureau of the Treasury (BTr) received mixed results in its last auction for Treasury bills (T-bills) for the year, awarding the 91-day tenor bucket with P4 billion but rejecting the bids for the 182-day and 364-day debt papers.
National Treasurer Rosalia V. de Leon told reporters the BTr sees investors for government securities like banks holding on to their cash as more people withdraw funds for their holiday spending.
“The Fed [Federal Reserve System] would be meeting on the rate hike; so I think [investors] are still waiting for the outcome. And secondly, a lot of banks are holding on to their cash given that, at this time, there are heavy withdrawals. They [banks] would rather prefer to stash cash rather than put these into securities,” de Leon said. “[That’s why] even if it’s better for them to also just bid out for the 91-day rather than the longer, the 182 and the one year.”
The 91-day tenor bucket was awarded the full offer of P4 billion as the average annual rate settled at 5.323 percent, showing a modest uptick of 2.70 basis points compared to the last auction rate of 5.350 percent. Bids for the security amounted to P6.575 billion.
Bids for the 182-day T-bill reached P5.884 billion with the auction committee deciding to reject all bids, as the average annual rate would have risen by 25 basis points settling at 6.594 percent if fully awarded the P5 billion on offer. The previous rate for the tenor bucket was at 6.344 percent.
The offer of P6 billion under the 364-day IOU was also rejected as the rate would have increased by 27.50 basis points settling at 6.860 percent if it was fully awarded. Bids for the security reached P6.855 billion. The previous rate for the T-bill was at 6.858 percent.
“On our end, we don’t see the need to pay more for the 182- and 364-day considering that we all know that inflation is on a downhill [trend] already and the price tag for those maturities [is] sufficient already. And it should not be much higher than what the current BVAL [Bloomberg Valuation Service] rates are,” de Leon said.
The BVAL rates for the security closed at 5.651 percent for the 91-day, 6.360 percent for the 182-day, and 6.703 percent for the 364-day tenor buckets.
When asked if the Treasury will still be issuing global bonds by the end of this year, as what was earlier stated by government officials, de Leon pointed out that the BTr has already closed up shop for any further issuances by the end of 2018 as the government already has sufficient cash buffers.
Meanwhile, she also explained that a reenacted budget will not affect the government’s programmed borrowings for 2019 as it sees that it would be passed within the first quarter of next year.
“It does not have an effect because by February or March, we anticipate that the 2019 budget will be passed, so we will have to also borrow the same requirements,” she said.
The government plans to borrow a total of P1.19 trillion for 2019 from both domestic and foreign financial institutions.