MANILA -- Demands for greater yield resulted in the rejection of bids for the 91-day Treasury bill (T-bill) and only partial awards for the two higher tenors by the Bureau of the Treasury (BTr) Monday.
Had the auction committee made a full award of PHP4 billion for the bellwether three-month paper, its average rate rose by 66.3 basis points to 5.067 percent from 4.404 percent during the auction last week.
Investors submitted PHP5.16 billion-worth of bids, higher than the offering.
The rate of the 182-day paper rose by 21 basis points to 5.894 percent from 5.684 percent previously.
It was offered for PHP5 billion but the auction committee awarded only PHP3.652 billion. Total bids reached PHP6.752 billion.
Average rate of the 364-day T-bill increased by 37.3 basis points to 6.256 percent from 5.883 percent.
This tenor was offered for PHP6 billion but only PHP3.349 billion was awarded since tenders totaled to only PHP5.949 billion.
Deputy Treasurer Erwin Sta. Ana attributed the rejections of bids and the partial award Monday to the higher-than-expected demand by investors.
Citing results of the surveys that the auction committee conducted, Sta. Ana said the government securities eligible dealers (GSEDs) “are still factoring in inflation” as well as further increase in the Federal Reserve’s key rates until next year.
He also said that undersubscription transpired due to investors’ wait-and-see stance on inflation developments.
Last September, inflation rose to 6.7 percent, higher than the previous month’s 6.4 percent but lower than expectations of 6.8 percent.
Sta. Ana said investors may still be digesting this development and hopes that this will have a positive impact on interest rates. “We should be expecting and considering (that) there’s really room for inflation to taper towards the end of the year. We could be looking at an influence at the interest space,” he said.
Meanwhile, the government’s planned issuance of US dollar-denominated bond later in the year remains on the table, he said. “We are on the Asian leg now and our team is moving to the US within the week to have those non-deal roadshows to US investors,” he said.
The non-deal roadshow in Asia is being done in Hong Kong while it is Los Angeles, Boston, and New York in the US.
Earlier, National Treasurer Rosalia de Leon said the government is considering to issue as much as USD1.5-billion-worth of dollar bond, otherwise known as the Republic of the Philippines (ROP) bond, before the end of this year.
She said they are still considering the tenor and timing of the planned issuance.
If the planned dollar-denominated issuance pushes through, it would be the second for the government this year after the 10-year dollar-denominated ROP bond issuance last January.
It will also be the fourth in terms of foreign borrowing for the government after the 1.46 billion renminbi-denominated three-year Panda bond issuance last March and the multi-year 154.2 billion Japanese yen Samurai bond last September. (PNA)
