By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT partially awarded the Treasury bills (T-bill) it auctioned off yesterday, rejecting all bids on the longer tenors, as investors await the US Federal Reserve (Fed) policy meeting.
The Bureau of the Treasury (BTr) borrowed just P4 billion out of the P15 billion it intended to raise at its auction on Monday, which is its last one for the year. This, even as bids from market participants reached P19.3 billion, lower than the P23.5 billion recorded last week but still filling the total volume on offer.
Broken down, the Treasury accepted P4 billion as planned for the 91-day securities out of tenders totalling P6.575 billion. The average rate slipped by 2.7 basis points (bp) to 5.323% from the 5.35% fetched last week.
Meanwhile, the government rejected all bids programmed under the 182-day tenor, with tenders amounting to P5.884 billion, slightly above the P5 billion it intended to raise. Had the government proceeded with a full award, the debt papers would have fetched an average rate of 6.594%, 25 bps higher than the 6.344% logged during the previous auction.
The BTr likewise did not award any 364-day T-bills, even as it received bids worth P6.855 billion, slightly above the programmed P6 billion. Had the government fully awarded the papers, the papers would have fetched an average yield of 6.86%, 27.5 bps higher than last week’s 6.585%.
Based on the PHP Bloomberg Valuation Service Reference Rates, the three-month, six-month and one-year papers were quoted at 5.706%, 6.425% and 6.709%, respectively, yesterday.
National Treasurer Rosalia V. De Leon said investors are holding on to their cash as they are still waiting for the policy meeting of the Fed.
The US central bank is widely expected to raise its interest rates during its policy meeting on Dec. 18-19. However, it is uncertain how many more hikes are expected from the Fed going forward given a potential slowdown in economic growth.
“The Fed will be meeting on the rate hike decision. I think they (market participants) are still waiting for the outcome,” Ms. De Leon told reporters on Monday.
She added that banks are now holding on to their funds to service heavy withdrawals during the holiday season.
“They would rather prefer to keep their stash rather than put into the securities,” Ms. De Leon said, noting that players would rather park their funds in the shortest tenor than in the six-month and one-year T-bills.
Sought for comment, a bond trader said the weak demand from investors was expected.
“Given that the BTr rejected the one-year and six-month, it looks like the market appetite is already weak as we usher in the holiday season,” the trader said in a phone interview. “Last year, the December auctions were also rejected. That’s why it is expected there will be lower amount of tenders.”
The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds.
NO MORE DOLLAR BONDS
Meanwhile, Ms. De Leon said the Treasury will no longer issue dollar-denominated bonds this year, with investors already closing their portfolios.
“Sarado na ang tindahan, ‘no (We’re done borrowing for the year)?” she said, adding that the Treasury is still looking at a confluence of factors abroad, such as the Fed’s decision this week, developments in US-China trade relations, as well as the exit of the United Kingdom from the European Union.
Ms. De Leon previously said there is “still some window” for the Treasury to offer dollar-denominated Republic of the Philippines bonds this year even as the market was on a risk-off sentiment. In January, the government offered 10-year greenback bonds amounting to $2 billion which carry a 3% coupon.

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