INVESTORS shied away from Treasury bills (T-bills), prompting the Bureau of the Treasury (BTr) to reject bids for all tenors on Monday’s auction.
Deputy Treasurer Erwin D. Sta. Ana told reporters the auction committee decided to “fully reject” all bids as tenders were undersubscribed and rates were leaning on the higher end of the curve.
“The committee…believes it will be more prudent to wait for the policy meeting of the MB [Monetary Board] this week,” Sta. Ana said. “And of course, we also have the Fed [Federal Reserve System] meeting this week.”
Had the auction committee awarded the tender of P2.991 billion for the 91-day tenor, with an initial P4 billion on offer, it would have an average annual rate of 4.381 percent. This would have shown an increase of 83.2 basis points compared to the previous auction rate of 3.549 percent.
Bids for the 182-day tenor were also undersubscribed at P4.575 billion with a P5 billion offering. If the auction committee awarded all tenders, the average annual rate would have settled at 5.142 percent. This would have increased by 54.5 basis points compared to the 4.597 percent in the previous auction.
“It could be a major factor for the participants to stay in the sidelines for a bit because, you know, from the 91-day and 182-day T-bills, both were undersubscribed, it could be a manifestation of that, of those two events happening this week,” Sta. Ana said.
From the P8.401 billion in tenders for the 364-day tenor, the average annual rate would have settled at 5.643 percent had the BTr awarded the full P6 billion on offer, increasing by 24.3 basis points compared to the 5.40 percent set in the previous auction for the security.
“We just observed that rates are inching higher and higher by the week. I think it’s also an indication of the uncertainty at the moment,” Sta. Ana added. “So we’ve taken a more prudent way of managing it. We just have to wait for what is going to happen this week.”
The MB will have another policy meeting on September 27.
In August the BSP announced a 50-basis-point hike to their overnight reverse repurchase interest rate. The hike also came on the heels of two 25-basis-point hikes in May and June.