Treasury partially awards bids for T-bills

The government partially awarded bids for Treasury bills at an auction on Monday after banks asked for a premium for securities with longer tenors following worries that the government might again breach its budget deficit target this year. The Treasury bureau sold P5.655 billion worth of Treasury bills from the original P8.5-billion plan. While the average rate of the 91-day Treasury bill declined, rates of the longer-tenor securities moved sideways, which National Treasurer Roberto Tan traced to investor concerns about the government's widening budget. Banks also adopted a wait-and-see stance ahead of the central bank's policy meeting on Thursday. The average rate of the three-month paper declined to 3.897 percent, 1.7 basis points lower than in the previous auctions. Investors offered to buy P6.985 billion worth of the debt paper, more than three times the P2-billion offer and showing strong liquidity in the market for short-term investments. On the other hand, the average rate of the 182-day Treasury bill inched up to 4.165 percent from 4.129 percent. The government made a partial award of P1.955 billion out of the P8.155-billion total bids. Had the auction committee decided to do a full award of P3 billion, the average rate would have risen to as high as 4.215 percent. Similarly, the average rate of the 364-day Treasury bill also rose by 8.5 basis points to 4.667 percent. The auction committee partially awarded P1.7 billion out of the P3.5-billion bids to prevent the debt paper from rising to as high as 4.718 percent. Investors offered to buy P4.750 billion worth of the securities. "There are still uncertainties about the [central bank's] policy rate-setting meeting on Thursday and about the government's budget deficit level," Tan told reporters after the auction. Monetary authorities will meet on Thursday to set key policy rates, now at 4 percent for the overnight borrowing rate and 6 percent for the overnight lending rate. Fiscal authorities have said the government's budget deficit could hit P293 billion this year, worse the earlier estimate of P233.4 billion. Analysts, however, expect the actual 2010 deficit to hit more than P293 billion. New York-based think-tank GlobalSource, for instance, said in its quarterly report on the Philippines that the 2010 deficit could hit P318 billion. — GMANews.TV