Bid rates for T-bills went “over the roof”, prompting rejection by the Bureau of Treasury on Monday (March 30).

The rate surge came as Luzon entered the third week of a one-month enhanced community quarantine meant to stop COVID-19 transmission by keeping people at home but paralyzing many businesses.

“All bids over the roof. Heard banks are giving out ultra-high deposit rates,” National Treasurer Rosalia V. de Leon said after the auction.

Rates for 91-day T-bills rose to 4.517 percent; 182-day, 4.259 percent and 364-day, 4.402 percent.

The rates, said De Leon in a statement, were “markedly higher compared with previous auction and prevailing market rates.”

The first Treasury auction for second-quarter domestic borrowings was also undersubscribed as tenders across three tenors, or maturity periods, totaled only P17.2 billion for the P20-billion offering.

De Leon was nonetheless optimistic that the P15 billion in 35-day T-bills to be auctioned off on Tuesday (March 31) “should be appealing and put their money to work” referring to investors.

De Leon pointed out that the five-week IOUs, which were last offered in 2004, have “very short maturity so funds will be available when needed,” adding that “there is still opportunity cost for holding to cash.”

On offshore commercial borrowings, De Leon last week said that the Treasury was “watching the US-dollar market closely, especially after bazooka interventions” by the US government, like a $2-trillion stimulus package and a limitless Federal Reserve buying spree of government securities.

De Leon said the Bangko Sentral ng Pilipinas’ (BSP) repurchase of P300 billion in government securities with the Treasury pushed through on Monday, fetching a “revenue-neutral” rate, without elaborating.

Also, De Leon welcomed BSP Governor Benjamin E. Diokno’s pronouncement last Sunday that the BSP can inject more money beyond P300 billion.

“We appreciate the governor’s statement and will certainly keep it in mind,” she said.

Since last week, the Treasury have been rejecting bids for a total of P70 billion in government securities, as “cash remains king” amid the one-month lockdown.

Edited by TSB


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