MANILA – Demand for higher yields prompted the Bureau of the Treasury (BTr) to reject all bids for the 91-day Treasury bill (T-bill) Monday and partially award the 182-day paper.
The average rate of the bellwether 91-day bill would have risen by 113 basis points to 4.679 percent from 3.549 percent previously had the auction committee awarded the debt paper.
It was offered for PHP4 billion but tenders only amounted to PHP3.09 billion.
On the other hand, rate of the 182-day paper rose to 5.206 percent from 5.142 percent.
It was offered for PHP5 billion and the auction committee awarded PHP3.2 billion after tenders amounted to PHP4.14 billion.
The one-year paper was awarded in full at PHP6 billion even with the 24.8 percent uptick of the average rate to 5.648 percent from 5.643 percent.
Investors submitted PHP9.831 billion-worth of bids.
National Treasurer Rosalia De Leon traced investors’ demand for higher yields to expectations for further increase in domestic inflation rates, thus, the same trend for interest rates.
The Philippine Statistics Authority (PSA) is scheduled to announce the September 2018 inflation print on October 5, which is widely expected to be higher than the 6.4 percent last August.
De Leon said the increase of prices of oil in the international market is among the factors that are pushing domestic rate of price increases, which, in turn, make domestic investors want to protect their funds.
She, however, said that amid the rejections of bids in recent auctions of T-bill and Treasury bond (T-bond), the government continues to maintain a comfortable cash position thanks to strong rise of revenues and other fund-raising activities such as the issuance of 1.46 billion yuan-denominated Panda bond and the 154.2 billion yen-denominated Samurai bond.
She added that they are considering other sources of funding like the planned US dollar-denominated bond, which is seen to be issued in the last quarter of this year.
She said they have not finalized the amount to be issued and the tenor, but stressed that they continue to monitor developments to be able to make correct decisions.
They have chosen Bank of China, Standard Chartered Bank and JP Morgan as lead arrangers for the issuance while these three along with Citi, UBS, Credit Suisse and Goldman and Sachs are the deal managers.
Earlier, Finance Secretary Carlos Dominguez III said the government is considering to issue around USD2 billion worth of debt paper this October.
De Leon said this amount “is really more of a possibility” and for pre-funding if the amount will exceed the programmed USD4.2 billion foreign borrowing program this year. (PNA)
