The Bureau of the Treasury’s offering of 35-day T-bills on Tuesday (April 21) was met with robust demand leading to P15 billion in awarded IOUs with an average rate of 2.714 percent.

Bids for the  tenor, or maturity period, which was returning after 15 years amounted to P62.2 billion, which made the auction four times oversubscribed.

Encouraged by the investor reception, National Treasurer Rosalia V. De Leon said the Treasury would sell another P10 billion of the IOUs that would mature on May 27 through licensed government securities dealers.

De Leon attributed the full award to “strong liquidity since P120-billion redemption [of treasury bonds was] still to be deployed.”

She also gave credit to Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno, who had remarked that the BSP “has a lot of arsenal for the war against COVID-19.”

“And, of course, this is just 35-day tenor so might as well earn some interest while banks still risk averse” to the uncertainty of whether current lockdowns to stop coronavirus transmission would continue beyond April 30, the deadline of the extended enhanced community quarantine over the entire Luzon island.

Given strong investor demand for the 35-day debt paper, De Leon said the Treasury may consider a regular offer of the very short tenor.

But high bid rates prevented the Treasury from selling 35-day T-bills last March 31, the first time since 2004 that these securities were again offered.

Last Monday, the Treasury sold another P10 billion in 364-day T-bills via its tap facility.

While the government was allocating more money for COVID-19 response, De Leon said tax collection of the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) so far had been “lower than last year.”

She said the year-on-year decline of tax collection in April “can be covered from other collections and borrowings” like dividends from GOCCs and other funds like income by the Treasury.

Last Monday, Finance Secretary Carlos G. Dominguez III said the April tax take “will be very bad” mainly because of extended deadlines to file and pay.

At the weekend, the Department of Finance (DOF) reported that first-quarter tax collections of the BIR and the BOC amounted to P600.86 billion, down 1.7 percent year-on-year and below the P757.12 billion target.

Edited by TSB

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