THE GOVERNMENT rejected all bids for the one-month Treasury bills (T-bills) it auctioned off on Tuesday as investors continue to ask for higher yields amid uncertainties caused by the coronavirus disease 2019 (COVID-19) pandemic.

The Bureau of the Treasury (BTr) rejected all bids for the 35-day T-bills it offered yesterday even as total tenders reached P29.617 billion, nearly twice as much as the P15 billion it had planned to raise.

Had it made a full award, the reintroduced 35-day tenor would have fetched an average rate of 3.39% with the highest bid at 3.5%, both above the 3.098% rate at the secondary market yesterday.

National Treasurer Rosalia V. de Leon said the BTr turned down all bids as the rates investors were asking for were higher than the PHP Bloomberg Valuation (BVAL) Service yields.

Despite the four consecutive full rejections in previous auctions since the enhanced community quarantine in Luzon started, Ms. De Leon said the government can still support its funding requirements despite an expected surge due to COVID-19-related expenses.

“Plenty of ammo — that’s why we rejected,” the official told reporters via Viber message yesterday.

Meanwhile, a bond trader said the result of the auction was expected due to high rates, adding that the Treasury seemed to be funded as it just received on Monday the payment for P300 billion worth of three-month government securities the central bank had agreed to buy last week at a zero interest rate.

“Also, not much demand given that time deposit rates for big accounts are high at mom (month on month). We might expect better demand for bills once BSP’s (Bangko Sentral ng Pilipinas) reserve cut materializes,” the trader added.

The trader said the trend of high rates and full rejections will likely continue in the next auctions “until banks can actually feel liquidity is coming in.”

The trader explained that most lenders are holding on to their cash in the meantime amid a spike in withdrawals, since the date for lifting the enhanced community quarantine (ECQ) will remain uncertain.

The BSP announced last week a cut in universal and commercial banks’ reserve requirement ratio (RRR) by 200 basis points (bps) to 12% effective Friday to release more liquidity. The cut is expected to free up some P180-200 billion in fresh cash into the financial system.

BSP Governor Benjamin E. Diokno has been authorized by the Monetary Board to cut banks’ RRR by a total of 400 bps this year. The central bank last week said reductions in the reserve ratios of other banks and nonbank financial institutions are also being studied.

Luzon is under a month-long ECQ until April 12 to contain and slow the spread of the virus which infected 2,084 and killed 88 in the country as of Tuesday. Officials have said the quarantine period can be extended or shortened as needed.

The Treasury has set a P190-billion local borrowing program for April, broken down into P130 billion in T-bills and P60 billion in Treasury bonds.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is capped at 3.2% of gross domestic product. — B.M. Laforga