MANILA — The Bureau of the Treasury’s (BTr) auction committee on Monday rejected bids for all tenors of Treasury bills (T-bills) after banks asked for high yields.
National Treasurer Rosalia De Leon told reporters after the auction that banks asked for unreasonable yields because of expectations for an uptick in the Federal Reserve rates next year and because the financial institutions are in the process of closing their books for the year.
“There is not much enthusiasm…and they also feel that given the very liquid position of the Treasury we will not also be included to accept the high rates offered by the banks today,” she said.
This after the BTr recently issued PHP255.4 billion worth of Retail Treasury Bond (RTB), proceeds of which will be used to finance the government’s programs next year.
Had the auction committee accepted bids for the benchmark 91-day bill, rate of the debt paper would have reached to as high 3.376 percent, higher than the 2.148 percent it fetched in the previous auction.
Secondary market rate for the same tenor Monday morning stood at 3.1607 percent.
Rate of the six-month paper would have registered an uptick to 3.020 percent from 2.663 percent and the one-year paper to 3.30 percent from the previous auction’s 2.962 percent.
Rate of the six-month paper in the secondary market in the morning session stood at 3.2929 percent and the one-year, 3.1285 percent.
“I think there is also no reason for banks to ask for so high rates 45 to 60 basis points higher than the previous auctions. Even comparing to the secondaries also,” De Leon said.
BTr offered a total of PHP20 billion worth of T-bills – – PHP8 billion for the 91-day and PHP6 billion each for the 182-day and 364-day paper.
Banks offered PHP2.975 billion for the three-month T-bill; PHP2.325 billion for the six-month; and PHP2.276 billion for the one-year bill.
De Leon said banks are also positioning ahead of expected increase in rates, both by the Fed and the Bangko Sentral ng Pilipinas (BSP).
The Fed’s last meeting for 2017 is scheduled from Dec. 12-13 while BSP’s is on Dec. 14. (PNA)