Govt rejects 1-yr T-bills, takes 182- and 91-day debt papers

The government rejected all bids for its one-year debt paper on account of unreasonably high bids from investors who decided to park their funds in short-term debt instead. Had the government accepted the bids for the 364-day paper, the one-year T-bills would have fetched an average rate of 3.406 percent or 17 basis points higher than the previous auction's rate. Total tenders for the tenor amounted to P5.770 billion, compared to the programmed sale of P4 billion. Investors, however, chose to funnel their funds to the government's 91-day and 182-day Treasury bills, which fetched average rates of 2.306 percent and 2.784 percent, respectively. The rate for the 91-day paper fell by 19.5 basis points to 2.306 percent, but investors were able to place P8.030 billion in tenders or four times the programmed sale of P2 billion. Tenders for the six-month paper, on the other hand, reached P5.880 billion, allowing the government to make award the P3 billion worth of the bills on program. According to National Treasurer Roberto Tan, uncertainties in the market ahead of the Bangko Sentral ng Pilipinas' (BSP) rate-setting meeting this Thursday prompted investors to funnel their funds into short-term debts. “They’re waiting for the action of the BSP. They’re wondering what the decision of the BSP would be," Tan said. The BSP so far raised key interest rates twice this year, once in March and again in May. In June, the BSP kept key policy rates untouched, but decided to raise the reserve requirement on deposits and deposit substitute of banks and non-banks. The move was intended to siphon off an estimated P38 billion currently circulating in the financial system. The BSP will decide on Thursday if it would keep its overnight borrowing rate unchanged at 4.50 percent and the overnight lending rate at 6.50 percent. —JMT/VS, GMA News