THE GOVERNMENT partially awarded the P20 billion in Treasury bills (T-bills) it offered on Monday, with the market veering away from the three-month papers as they opt to hold cash due to heightened fears over the escalation of the coronavirus disease 2019 (COVID-19) outbreak in the Philippines and its impact on the economy.

The Bureau of the Treasury accepted bids worth just P14 billion against its P20 billion plan, even as total tenders hit P42.28 billion.

Broken down, the Treasury rejected all bids for the 91-day T-bills, with total bids reaching just P4.97 billion for the P6-billion offer. Last week, rates for the tenor averaged 3.024%, inching only by one basis point (bp) from the 3.013% seen in the preceding auction.

For 182-day T-bills, the BTr fully awarded its P6 billion offer, which was met with tenders worth P11.25 billion. Average rate for the papers clocked in at 3.398%, inching down by 8.6 bps from the 3.312% seen a week ago.

For the 364-day papers, the government also made a full award of its P8-billion offer as bids totaled P26.06 billion. The one-year securities were quoted at an average rate of 3.557%, lower by 3.1 bps compared to the 3.588% seen in the previous week.

National Treasurer Rosalia V. de Leon said they opted to reject all bids for the 91-day T-bills due to lack of interest from investors as they worry about the economic impact of COVID-19.

“Bids were 57 bps higher than previous auctions. Practically no interest with undersubscription,” Ms. De Leon said in a Viber message after the auction.

Asked whether the said trend could be a result of worries due to the impact of the virus, Ms. De Leon said: “Yes. Preference to hold cash.”

A bond trader noted that yields for this week’s auction saw lesser appetite for the three and six-month bills, that had yields which moved sideways last week.

“This T-bills auction saw even less appetite for those tenors especially when it comes to the three-month bills as this tenor was undersubscribed and apparently the bids were at yields deemed too high by the BTr,” the bond trader said in a text message.

“Looks like investors are rushing to cash since the coronavirus will heavily affect the economy,” the trader added.

Metro Manila was placed under enhanced community quarantine on Monday, which will suspend transportation and implement a strict home quarantine for households.

After a below-target 5.9% gross domestic product (GDP) expansion in 2019, the government is aiming for a 6.5% to 7.5% economic growth in 2020.

But with risks from the COVID-19 plaguing the economy, the National Economic and Development Authority said earlier this month they expect GDP growth to come in at just 5.5% to 6.5%, as the economy starts feeling the impact of the outbreak, specifically on tourism and trade.

Analysts have warned of the potential impact of the lockdown in Metro Manila to the economy, given that the region contributes about 40% to the GDP and is home to most financial institutions in the country.

Infected patients of the virus in the country have reached 140, with deaths recorded at 12 as of press time.

Across the world, the virus has infected more than 140,000 and has caused the death of more than 3,000 people. — L.W.T. Noble