High bids force T-bill rejections

The Bureau of the Treasury (BTr) yesterday rejected all bids for Treasury bills (T-bills) as investors exercised caution ahead of the Monetary Board and Federal Open Market Committee meetings this week.

“The auction committee made a full rejection for all bids in today’s auction of Treasury bills as rates came in higher than expected amid tepid demand,” the BTr said.

Had the auction committee decided to fully award the 91-day securities, they would have fetched an average rate of 4.381 percent, 83.2 basis points higher than the 3.549 percent recorded in the previous auction.

Tenders for the three-month debt papers reached only P2.991 billion, lower than the P4 billion offering.

Submitted rates for 182-day T-bills also averaged 5.142 percent, 54.5 basis points up from last week’s 4.597 percent.

The securities were likewise undersubscribed as total tenders reached P4.575 billion, not meeting the P5 billion offer size.

Lastly, the 364day debt notes could have fetched an average rate of 5.643 percent if fully awarded. This is 24.3 basis points above the 5.4 percent recorded the previous auction.

It was the only tenor bucket which received a healthy demand from the market, with total bids amounting to P8.401 billion. This is higher than the P6 billion offering volume.

In an interview, National deputy treasurer Erwin Sta. Ana said the auction committee decided on a full rejection as both the bureau and the market adopted a wait-and-see approach before the policy meetings of the Bangko Sentral ng Pilipinas and US Federal Reserve, both of which are happening this week.

“The committee decided to fully reject all tenors, I think because the committee believed that it will be more prudent to wait for the policy meeting of the monetary board this week, and of course, we also have the Fed meeting this week,” Sta. Ana told reporters after the auction.

“It could be a major factor for the participants to stay on the sidelines for a bit. From the 91 and 182- day T-bills, both were undersubscribed so it could be a manifestation of those two events happening this week,” he said.

He said the rates asked by the market for the securities were also rising, also a reflection of their uncertainty ahead of the two central bank events.

Meanwhile, Sta. Ana said the Treasury is eyeing a volume of at least P15 billion for the upcoming “Marawi bond” issuance of the Duterte administration.

“Probably – although this is not sure yet – an auction size at the minimum. It depends on the requirement for Marawi, and how much appropriations is currently available for Marawi expenditures,” he said.