Govt won't accept high bids at auction — Purisima

The Aquino administration has stood firm in its decision not to accept high bids for its debt papers as inflation in the country remains manageable, Finance Secretary Cesar Purisima said Wednesday. "There's no reason for [interest] rates to increase because... inflation numbers are well within the program," Purisima told reporters in an interview. National Statistics Office records showed that inflation averaged at 3.8 percent last year, well within the forecast range of 3.5-5.5 percent. In the auction last Monday, the Bureau of the Treasury (BTr) rejected all the bids for the 91-, 182-, and 364-day Treasury bills as investors submitted unreasonably high bids for the three tenors. Government's auction panel decided to reject the bids as they were outside expectations. Government could afford to reject all the bids because of its comfortable cash position, the BTr said. According to government data, the BTr planned to sell P8.5 billion for the 91-day paper, P3.5 billion for the 182-day paper, and P4 billion for the 364-day paper during last Monday's auction. If the government accepted all the bids, the average rate of the 91-day T-bill would have risen 264 basis points to 3.34 percent. The 182-day debt paper would have increased 252.9 basis points to 4.092 percent, and the 364-day paper 198.3 basis points to 4.439 percent. Monday's debt sale was part of the Aquino administration's program to borrow P114 billion from the domestic debt market for the first quarter of 2011. The BTR is planning to sell P51 billion in T-bills and P63 billion in Treasury bonds this January to March. — JE/OMG, GMANews.TV